Here's why Windows 8 is in trouble: Tablets will outsell notebooks in 2013

The sluggish launch of Windows 8 may be just the beginning of bad news for the new operating system. A new report says that tablets will far outsell notebooks in 2013. So all those fancy new Windows 8 ultrabooks at CES may not make a big enough difference for Microsoft because Microsoft's share of the tablet market is negligible.

At CES there's an impressive lineup of new Windows 8 ultrabooks and hybrid devices. But Windows 8 tablets and Windows RT tablets, not so much.

That spells trouble for Microsoft. A new report by DisplaySearch claims that in 2013 tablets will outsell notebooks by a wide margin -- more than 240 million tablets versus 207 million notebooks. Microsoft's share of the tablet market is minimal, and sluggish sales of its Windows RT-based Surface tablet hasn't helped. There are a number of reasons that the Surface hasn't sold, including poor distribution. But cost is a major factor as well. An IDC report warns that the Surface's $500 selling price will make it very hard for Microsoft to crack the tablet market. The report warned:

"Price points are critical in tablets, and Microsoft and its partners will have a tough time winning a share of consumer wallet with price points starting at $500."

The lack of buzz around Windows 8 tablets is likely why Microsoft CEO Steve Ballmer made an surprise visit to hype Microsoft's tablet operating system, Windows RT. Ballmer claimed that the number of apps for Windows RT has increased by a factor of five since its release in October.

If that's the best piece of news he has about Windows 8 and Windows RT tablets, Microsoft is in trouble. Bloomberg, for example, notes that analysts at FBR Capital Markets have called Windows tablet sales "disappointing."

If tablets do outsell notebooks in 2013, Microsoft will see its market share of the entire computer market -- including tablets, smartphones, and traditional PCs and notebooks -- decline even further. The best news at CES this year for Microsoft wouldn't have been buzz around ultrabooks; it would have been around tablets and smartphones. So far, that hasn't happened, and that's not good news for Microsoft.

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