Google gives away Android, so manufacturers of Android tablets don't incur a comparable expense, and Apple limits iOS to its own iPad, absorbing the cost of development in order to pull in large profit margins on the hardware.
All things being equal, then, an Android tablet will always be less expensive for an OEM to build, and less expensive at retail.
"But it's not just the licensing costs that are a problem," said Bob O'Donnell of IDC. "Windows RT breaks the core value proposition of Windows. People use Windows because it's compatible [with legacy software]."
Windows RT, unlike its bigger brother Windows 8, cannot run traditional Windows software, only the apps created using the WinRT API and distributed through Microsoft's app store.
O'Donnell said that Microsoft would, if it hasn't already, cut the price of Windows RT licenses sold to OEMs in an effort to entice them to manufacture tablets powered by the OS. "But that leaves the fundamental problem around compatibility," he observed. "RT implies compatibility because it's using the 'Windows' name, but [the fact it doesn't offer compatibility] has been lost in the noise."
Confusion ensued, he said, and continues.
Milanesi declined to bet that Microsoft would slash Windows RT license prices -- or make the even more aggressive move of giving away the OS -- but said Microsoft has to do something to cut OEM costs.
"Unless [Windows tablets] can match the $199 price of Android tablets, it's going to be really hard for [Microsoft and its OEMs]," said Milanesi. Tablet pricing is polarized, she added, with Android at the bargain basement end and iOS at the top. That gives Microsoft a tough choice and less maneuvering room than it would have had had it entered the tablet market a year or year-and-a-half earlier. "From an app perspective, Microsoft can't get a premium for Windows RT," she added, referring to the relatively small size of the Windows Store and the lack of what she, and others, see as must-have, high-quality apps.
Wes Miller, an analyst with Directions on Microsoft, agreed that Windows RT faces a bumpy road because of its app inventory. "If you're going to have someone buy a device that requires all-new apps," Miller said, of Windows RT, "than you need to have an amazing collection of apps."
That is something Windows RT and the Windows Store does not have, Miller argued. "There's still not a huge collection [of apps] that pull you into the platform. But like a lot things Microsoft does, Windows RT is a long-term bet."
Long-term or not, Miller isn't enthusiastic about Windows RT's chances. "I've been concerned about Windows RT from the beginning," he said. "I don't see a long-term viability for Windows RT as a value-driven strategy."
While Windows RT has languished -- according to IDC, Microsoft and its hardware partners shipped 200,000 Windows RT devices in the first quarter -- Windows 8 tablets have gotten some sales traction, and more importantly, support from OEMs. IDC estimated first-quarter shipments of Windows 8 tablets at 1.6 million units.
Acer, for example, recently said it would wait until Windows Blue before deciding whether to build tablets running Windows RT. Meanwhile, it's keen on Windows 8 tablets, as a leak of an 8.1-in. Acer Iconia tablet last week showed, even though its $380 price is higher than that of the entry-level iPad Mini.
"This says that OEMs believe customers would rather have application compatibility than hardware efficiency," said Miller, contrasting battery life between devices running ARM processors and Windows RT against others powered by Intel CPUs and Windows 8.