Seeking Alpha
Long/short equity, contrarian, independent research, tech
Profile| Send Message| ()  

I have been an ultra, uber, perma-bear on Windows RT. Windows RT is quite literally Windows 8 but with fewer features, but ships on devices that have no cost advantage over Windows 8 equivalents. See, if I could go out an buy a 7" Windows RT tablet for $200, then sure, that makes sense. But the problem is that ARM (ARMH) based chips aren't any cheaper than the Intel (INTC) Atom chips, and Windows 8 costs Microsoft (MSFT) no more to produce and sell than Windows RT. In fact, if anything, they're robbing themselves of a potential "Office" purchase by selling RT. Anyway, it looks like Windows RT is on its way to the morgue, especially with some of the latest developments that we've been seeing.

Windows RT's Only Chance Is On 7"- 8" Tablets

Windows RT is basically Windows 8, but it won't run any legacy applications, probably won't recognize most Windows-oriented peripherals, and forces the user to use the "Modern UI" (the tiles) as desktop application support that is not part of the program. It's a gimped Windows. On a 10" tablet or above, this makes no sense, as most people buying a 10" Windows tablet probably are doing so to have the value proposition of a "2 for 1" deal - tablet and PC. But on a 7"-8" tablet? Windows RT is fine. While I obviously prefer more features to fewer features, I doubt people buying 7-8" tablets are trying to do traditional "PC" things, so lack of app and peripheral compatibility is probably okay.

But it seems that Acer just announced a brand new tablet, called the Acer W3-810. It's an 8 inch full Windows 8 tablet powered by an Intel Atom Z2760, and it will sell for $380. This is a real iPad Mini competitor. Not only does it work as a tablet thanks to Microsoft's "Modern UI," but it will still support all of the Windows 8 peripherals and software. This means:

  • Printing to traditional Windows X86 compatible printers works
  • Full Office support
  • Peripherals such as game pads will work
  • All Windows 8 programs work

The future for such devices is clear - once Intel's Atom chips become powerful enough (and I think they do with "Bay Trail"), people will have this very fast, slick portable tablet that can use Intel's WiDi to use TVs as displays, can be docked in an office setting to act as a real "PC replacement" when attached to a real keyboard, mouse, and monitor set, and all while having the portability of an 8" tablet. This is seriously cool stuff with plenty of potential. The iPad can't do this, the Google (GOOG) tabs can't do this, but Microsoft's full Windows 8 based tablets certainly can.

There is a real value proposition for having a full Windows 8 experience on a highly portable device, and with the right hardware and marketing, this can go incredibly far, and the share losses to Android from the perspective of the consumer computing market could be reversed with this strategy.

Windows RT's Fate?

Microsoft will probably put out a 7-8 inch "Surface" when it refreshes the lineup, and will probably move the 10 inch "Surface" and "Surface Pro" to Intel's "Bay Trail" and "Haswell," respectively. Expect Nvidia (NVDA) to win this mini Surface socket, as Nvidia seems to have invested much more in the Windows RT ecosystem than the other leading mobile chip vendor, Qualcomm (QCOM). I don't think Microsoft will use an Intel chip in the potential mini Surface simply because it wants to save face on the RT project.

But Microsoft's own devices will be the only RT devices that sell in numbers. The Lenovo (OTCPK:LNVGY) Yoga 11 sold so incredibly poorly that Lenovo will now be releasing a Yoga 11S using Intel's new 7W SDP/13W TDP low power "Ivy Bridge" processors. It seems that Newegg, a leading PC e-tailer, quietly delisted the Yoga 11 as it quickly cleared the inventory for the new 11S.

Eventually, I believe Windows RT just dies. Think 2014-2015 timeframe. It will end up just like the version of Windows for the DEC Alpha ad the MIPS instruction set architectures ... buried and forgotten.

Conclusion

Windows RT was a hedge against Intel not building an aggressive enough roadmap for its low power chips, and I believe that the hedge is no longer necessary. Expect Intel to own the majority of the Windows tablet market, and expect AMD (AMD) to utilize its X86 compatibility to also get in on this market. Things are going to get really interesting from both the investor perspective as well as the consumer perspective. I can't wait for the second half of this year.

Source: Intel And Microsoft Speed Up Windows RT's Death

Additional disclosure: I am short ARMH