Microsoft can no longer command high prices for its tablet OS because it lacks incumbency and vertical integration. The net result is her competitors are drivi

Microsoft can no longer command high prices for its tablet OS because it lacks incumbency and vertical integration. The net result is her competitors are driving MS towards a cliff of zero or low margin OS and inexpensive apps. If you look at Windows 8 carefully, the ARM version will not run desktop mode. This gives it some protection that a tablet manufacturer adding on a $20 keyboard turns a tablet into a replacement OS. However, as more applications become metro-fied, its margins will be totally fried. This is why Microsoft is pinning its hopes on the server. Azure and various cloud services and tight developer tooling might make up for the lost revenue.