Samsung Halts U.S. Windows RT Tablet Plans

Samsung is nixing plans to make tablets based on Microsoft's Windows RT operating system in the U.S. for now, a move that could be a major setback for Microsoft and its efforts to win over U.S. consumers.

According to a report Friday from CNET, Samsung decided to halt production of Windows RT devices after receiving "modest feedback" from its U.S. retail partners, suggesting demand for the products would be light.

Samsung also told CNET it conducted studies that proved U.S. consumers were confused about the differences between Windows RT -- the version of Microsoft's new software optimized for ARM-based devices -- and Windows 8, the version running on devices with x86-based architectures, namely, those supported by chip maker Intel.

[Related: CES 2013: 10 Sleek Devices Running Windows 8 ]

"There wasn't really a very clear positioning of what Windows RT meant in the marketplace, what it stood for relative to Windows 8, that was being done in an effective manner to the consumer," Mike Abary, Samsung senior vice president and head of the company's U.S. PC and tablet businesses, told CNET. "When we did some tests and studies on how we could go to market with a Windows RT device, we determined there was a lot of heavy lifting we still needed to do to educate the customer on what Windows RT was. And that heavy lifting was going to require pretty heavy investment."

Samsung also felt it would have to sacrifice hard-hitting specs, such as memory capacity, to meet the lower-end price points associated with Windows RT devices, a move Abary said the company wasn't willing to make.

"We didn't necessarily attain the price point that we hoped to attain," Abary said. "It's not an issue on Microsoft's side," he said. "It's more an issue of how the product was built and some of the trade-offs we had to incorporate in it."

Abary said Samsung could reverse its decision, depending on how the Windows RT market evolves in the U.S. over time. "It's not something we're shelving permanently," he told CNET. "It's still a viable option for us in the future, but now might not be the right time."

Samsung already has launched devices running Windows RT, such as its Ativ Tab tablet, in other markets, including the U.K. and Germany.

Microsoft did not immediately respond to a request for comment.

Samsung's retreat from Windows RT is the latest of several setbacks for Microsoft and its new Windows operating systems. Analysts have said sales of new Windows 8- and Windows RT-based devices have been modest since their launch in October, and consumers' reactions to the new software have been mixed.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, echoed Samsung's belief that consumers are confused about the value of Windows RT. He said part of the problem is that devices running Windows 8, particularly those powered by Intel's new Clover Trail Atom chip, are just as competitively priced and energy-efficient as Windows RT devices have been touted to be, which is blurring the line between the two.

"Samsung's decision is yet another negative data point for Windows RT in the short term. It also supports the concern over the Windows RT consumer value proposition. The fly in the ointment is Intel, who Microsoft didn't expect to deliver a competitive tablet chip, which they did with Clover Trail," Moorhead said.

"This complicates the differentiation between Windows RT and Windows 8. I have always believed that Windows RT should never been called 'Windows,' as one of its core pillars is backward compatibility, which it doesn't deliver," Moorhead continued. "It's not all doom and gloom as Microsoft can salvage this for the long term, but they must move quickly to ensure long-term success."

Samsung's decision to stop U.S. production of Windows RT tablets comes just three days after Microsoft CEO Steve Ballmer joined Paul Jacobs, CEO of Qualcomm, a major manufacturer of the ARM-based chips found in Windows RT devices, on stage at CES. The two touted a number of Windows RT devices, including Samsung's ATIV Tab tablet.

PUBLISHED JAN. 11, 2013