The competition in low price segment of the PC industry is apparently heating up. News has surfaced that Microsoft ( MSFT ) is planning to launch two cheap laptops. The two new Microsoft laptops are priced at $149 and $179 and are scheduled for a launch date towards the middle of the year. These laptops will directly target the market segment that has been so well addressed by Google's Chromebook. Furthermore, Microsoft also hopes that these laptops will showcase functionality of its Windows 10, which is scheduled to be launched around the same time. This will give Microsoft a much needed leg up for its Windows 10 t a price point it has yet to address, a price point Google has so well atrgeted with its Chrome book. Furthermore, the price points for the offerings suggest that Microsoft is targeting the emerging markets, where customers are price conscious, and have frugal spending habits. In this article, we will briefly explore Microsoft's strategy behind the launch.
Microsoft hopes that with these launches it will be able to gain traction in a segment Google created in launching its its Chromebook. The laptops are expected to go on sale in mid of this year, around the same time when it launches its latest Windows 10 operating system. The successful launch of these devices is important for Microsoft as its thrust into a rapidly growing segment of the PC market for lower cost devices. Surely the lower price points should appeal as well to price sensitive customers in emerging economies. We therefore believe that Microsft's low cost systems will be able to capture a some market of this growing laptop segment. More importantly, this launch will show case Windows 10's functionality for cheaper devices and help original equipment manufacturers (OEM) to adopt Windows as preferred OS instead of Chrome. Chromebooks, cheap laptops powered by Chrome OS, gained strength, generating unit sales of more than 5 million, mainly in hte education market. Microsoft hopes that it will be able to dent Chrome market share through launch of these cheap devices and improve its ecosystem of devices going forward.
We currently have a $44.46 price estimate for MSFT , which is 10% above the current market price.
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