Don't look now, but the PC market is cratering.
Microsoft can't be pleased about that, especially since it's prepping Windows 8.1 for release in a year that is looking worse and worse for traditional PCs.
To be fair, 2013 was always predicted to be a down year for PC makers. Tablets, especially those in the $300 and under range, are thriving and people are moving their consumption habits towards them in droves.
But it wasn't supposed to be this bad. Originally, the IDC research firm predicted that PC shipments would be down 1.3 percent. Now, PC World reports that the firm is expecting a nearly 8 percent drop by the time 2014 rolls around.
Those awful expectations are what makes Windows 8.1 important. Not only will it update Windows 8 for current PC users, but the new operating system upgrade will also be optimized for smaller tablets and cheaper laptops.
According to PC Mag, if OEMs decide to make Windows 8.1-compatible devices running on lower-end Intel and AMD chips, they can license the software at a discount of more than 50 percent. And Microsoft Office is tossed into the package for free. That means that in addition to cheap tablets hitting the market this year, you're going to see a wide range of Windows 8.1 laptops with Microsoft Office built in.
"While they realize that making touch-based laptops in the $399 to $549 range is somewhat risky since it could eat into the sales of more expensive ultrabooks, all OEMs have still embraced this opportunity and will soon offer such ultramobile laptops," Tim Bajarin wrote at PC Mag.
But if the PC market is dying, what's the point of all these new laptops? There are two potential advantages for Microsoft here. One concerns the fact that while PCs and laptops are in decline, Chromebooks are not. If the company can offer cheaper laptops with Office and Windows functionality, it may be able to cut off the success of Chromebooks and find a way to maintain its position against Google.
The second is that people still need PCs to do some things.
"Research continues to confirm that consumers can handle about 80 percent of their computing needs on a tablet and the remaining 20 percent must still be done on a computer," Bajarin wrote.
Consumption is moving to tablets, but productivity still generally requires something more full-featured. Even if Microsoft's tablets don't take down Apple and Google, it could still convince consumers to purchase a laptop with Office built in for other functions. If nothing else, that would at least buy the company even more time to make a dent in the mobile space.