How The Windows RT Nook Will Happen And Its Price

The rumor out of China this morning is that at Computex 2013 Asus will introduce a stylus-enabled seven-inch Windows 8 tablet for US$300. Right now, we don’t know if that’s full Windows 8 or just Windows RT. Since only the Surface Pro has a stylus, it’s likely full Windows 8. So US$300 would be quite a stunning price.

That got me to thinking what the price of a Windows RT-based Nook tablet must be to succeed.

And I think it’ll have to be US$149.99 to succeed.

Could that price point be met?

I think so.

iPad Mini clones out of China are retailing for US$170-$200. The Chuwi V88 is a quad-core Rockchip 3188 powerhouse, with some owners reporting it renders web pages faster than the iPad Mini. It’s also the most expensive of the clones, between US$10-$20 more than the others.

So if around US$200 is the current floor price for a powerful quad-core 4:3 7.85-inch screened tablet, how to get it down to US$149?

Subsidize it.

Factor in eBook, video, audio, and even app sales to those who will buy it.

That’s what Amazon does with its seven-inch Kindle Fire tablets.

A Windows RT-based Nook is a far bigger bet than Amazon’s original Kindle Fire.

This “Nook RT” must accomplish two things:

1) Keep Nook Media alive
2) Keep Windows RT alive

It can be done — at the right price.

While Windows RT has been unpopular in the general tablet market, a “Nook RT” would not be positioned as a competitor to the iPad. It would be positioned as a more powerful update/upgrade to the Android-based Nooks.

People coming to it would be past Nook customers, who primarily count on it to read their Nookbooks.

Everything past Nookbook functionality is a bonus.

In addition, by being a real inexpensive Windows RT tablet, even those who disdained Windows RT in the Surface and Asus tablets would be tempted to go for it.

First, they’d recognize it to be a great bargain.

Second, they wouldn’t expect much for their $149.99 risk — but could be pleasantly surprised with what they actually get.

Those two things are exactly what drove sales of the Nexus 7 through the roof.

It was the first inexpensive seven-inch Android tablet from a known brand.

As word spread out from users about its additional USB On The Go capabilities and plain vanilla Android experience, it increased sales.

The “Nook RT” would be a Trojan Horse strategy for selling Windows RT.

People have become increasingly skeptical of my assertion that a “Nook RT” will happen this year.

It will.

All of you have missed the glaring loophole that will allow it.

First, separate the news that Microsoft has delayed its seven-inch-or-so Surface model until next year. I never said a “Nook RT” would be made by Microsoft. I did, however, say that Microsoft delaying its tablet was to make room for a “Nook RT.”

Second, Microsoft changed the minimum screen resolution for Windows 8 to 1024 x 768. The timing of that change was no accident. The timing indicated Microsoft was fully informed of Nook tablet sales tanking and the need of Nook Media to compete against the iPad Mini.

Third, the change was not made for other partners — it was made specifically for Nook Media, to protect Microsoft’s $300M investment.

Fourth, as it became clear to William Lynch at Nook Media that Android had become a dead end for Nook hardware, he was persuaded by Microsoft to consider Windows RT. Even further: Microsoft would help them with that transition. (Part of that assistance could be a full-blown acquisition of Nook Media. It likely has to be, to finance such a transition.)

Fifth, Nook Media doesn’t have to engage in a long design cycle to get a “Nook RT” done. This is where the loophole comes in to get a “Nook RT” out for the 2013 holiday season. Nook Media — with the help of Microsoft — can get a Chinese tablet to be the “Nook RT.”

Sixth, just as Google contracted with Asus to sink its own advanced seven-inch tablet to become the Nexus 7, somewhere in China there has already been a 1024 x 768 tablet with a powerful ARM CPU designed and ready to manufacture (China is notorious for fast product cycles). Microsoft will port Windows RT to that ARM CPU (dear god let it be the Rockchip 3188 if they can’t get an Exynos!) and in combination with Nook Media, the entire production run of this still-unknown-to-the-general-public tablet will become the “Nook RT.”

Those are all the dots connected and how it will all play out.

What I don’t know is who the Chinese contractor will be.

There are several possibilities (not in any order): Onda, Ramos, Chuwi, Ainol, Pipo, and others really known only by their company names, not as consumer brands.

The tablet hardware is done. All that remains is to get Windows RT running on it and for whatever hardware design staff remains at Nook Media — after the Android tablet bloodbath — to design the Nook-like shell for it.

Doubt all you want. This is how it will be.

Unless unforeseen problems develop and Microsoft backs out of acquiring Nook Media. Then Nook Media itself is sunk. It can’t do a “Nook RT” without Microsoft. And it’s unlikely to be able to raise the capital it needs to stay alive.

One thing to watch for: A fire sale price cut on the Nook HD and Nook HD+ to clear out all remaining stocks as soon as possible. This would likely happen before an announcement of Microsoft acquiring Nook Media and signal that such an acquisition will happen. The fire sale could happen within a few weeks with the acquisition announced late June.

And oh, there’s always the One More Thing. In this case, two more things.

1) Neither Microsoft nor Nook Media can expect anything to succeed if Nook Media doesn’t offer standard Adobe DRM on its Nookbooks.

2) Microsoft must be prepared to replace any Android apps Nook Media tablet customers have bought from the Nook App Store with Windows RT apps — for free. All friction must be removed from the process of converting Android Nook owners to “Nook RT” customers. Do what’s right.

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