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Uh-oh, Windows RT, Samsung's got second thoughts

Mike Abary, the head of Samsung's PC and tablet business in the U.S., tells CNET that the company will not be releasing its Windows RT device in the U.S. because retail partners don't see strong demand and because the value proposition for Windows RT isn't clear to consumers.

Samsung's Ativ Tab runs Windows RT, shown here with the mandatory new Metro interface by Damien Cusick, general manager of Samsung Electronics UK, at a press conference at IFA.
Samsung's Ativ Tab runs Windows RT, shown here with the mandatory new Metro interface by Damien Cusick, general manager of Samsung Electronics UK, at a press conference at IFA.
Stephen Shankland/CNET
LAS VEGAS--Microsoft launched Windows RT with grand ambitions only a few months ago, but CNET has learned the operating system is facing yet another setback.

This time it's Samsung having second thoughts about the computer software that runs on cellphone chips.

Mike Abary, the Samsung senior vice president who oversees the company's PC and tablet businesses in the U.S., told CNET today at the Consumer Electronics Show that the Korean electronics giant won't be launching its Qualcomm-powered Windows RT device in the U.S. It's unclear what the company's plans are for the non-U.S. markets.

Abary noted Samsung reached its decision about he device, dubbed the Ativ Tab, for two main reasons. First, feedback from its retail partners indicated demand for such products is only modest. Second, Samsung determined it would take a lot of investment to inform consumers about the benefits of Windows RT. Here's what he told CNET:

There wasn't really a very clear positioning of what Windows RT meant in the marketplace, what it stood for relative to Windows 8, that was being done in an effective manner to the consumer. When we did some tests and studies on how we could go to market with a Windows RT device, we determined there was a lot of heavy lifting we still needed to do to educate the customer on what Windows RT was. And that heavy lifting was going to require pretty heavy investment. When we added those two things up, the investments necessary to educate the consumer on the difference between RT and Windows 8, plus the modest feedback that we got regarding how successful could this be at retail from our retail partners, we decided maybe we ought to wait.
Abary added that one of the big selling points for Windows RT is the devices should be less expensive than those using Windows 8. However, Samsung found that it would have had to make tradeoffs -- like including less memory -- to bring down the price, and that wasn't something it was willing to do.

"We didn't necessarily attain the price point that we hoped to attain," Abary said. "It's not an issue on Microsoft's side. It's more an issue of how the product was built and some of the tradeoffs we had to incorporate in it."

Check out CNET's in-depth report on how Microsoft became a control freak with tablet makers.

The comments from Abary come only a few days after Microsoft CEO Steve Ballmer joined Qualcomm Chief Executive Paul Jacobs onstage during his keynote address at the Consumer Electronics Show in Las Vegas. The two talked up their partnership on Windows RT devices and touted the devices from Dell and Samsung.

"The new Windows PCs, tablets, and phones, I think are stunning," Ballmer said. "Windows RT devices are the new addition to the family."

Samsung's move to hold off on Windows RT, at least in the U.S., raises concerns about the operating system and deals a blow to Microsoft's efforts to gain a bigger footprint in mobile devices. Samsung is one of the world's top provider of smartphones and tablets, and while it's relatively new to the U.S. PC market, those operations have been experiencing double-digit sales growth on a percentage basis. That means Samsung is a key partner for any software maker to have.

Qualcomm CEO Paul Jacobs is joined on stage at CES 2013 by Microsoft CEO Steve Ballmer. James Martin/CNET

While Samsung isn't releasing the initial product it developed with Qualcomm in the U.S., Abary said the company may consider Windows RT devices in the future.

"We want to see how the market develops for RT," Abary said. "It's not something we're shelving permanently. It's still a viable option for us in the future, but now might not be the right time."

We've contacted Microsoft and will update the report when we hear back.

Meanwhile, Rob Chandhok, president of the Qualcomm's Internet services division, told CNET today at CES that while the company cares that Samsung won't be launching its product in the U.S., "there are a bunch of devices in the pipeline."

"These first rounds of devices are going to be followed by other rounds of devices," he said.

Microsoft has tightly controlled the development process for Windows RT devices, limiting the number of companies the chipmakers could work with, in order to make better products. That's meant that few products have hit the market, and some companies in the initial development program ultimately decided to abandon Windows RT.

Even before Microsoft's Surface RT tablet hit the market, Hewlett-Packard said in June that it had scuttled its immediate plans for a Windows RT device after receiving feedback from customers that they preferred Intel-powered tablets for business use. And Toshiba in August said it canceled its initial RT products because of development problems that would have delayed launch. The company believed its devices would be handicapped if they weren't introduced with the first wave of Windows RT products.

Samsung unveiled its Windows RT device at IFA in August. However, around the time Windows 8 and RT launched in October, it said it was still trying to formulate its strategy for Windows RT.

Meanwhile, Abary said Samsung saw "exponential" growth in its tablet business in the fourth quarter, with seven-inch devices experiencing the strongest demand.

"We saw significant growth in every category," Abary said. "There's now way we could keep up with all the demand."