Bad Sign for Microsoft as Dell Discounts Windows RT Tablet

NEW YORK ( TheStreet) - More bad news for Microsoft ( MSFT) concerning their Windows RT operating system. One of their largest companies to embrace the somewhat crippled operating system has just slashed the price of their Windows RT tablet.

If you bought one yesterday, you paid at least $500 for Dell's XPS10 hybrid tablet/notebook computer you paid too much. As of today, Dell ( DELL) is charging only $300 for the base model. They're now also discounting added memory and the keyboard docking station. Normally, this would signal a new, upgraded model was on the way. In this case, it signifies the fact that no one wants to buy machines which use Microsoft' Windows RT

Microsoft was gaining 0.5% in mid-morning trading to $36.69 while Dell dropping 0.2% to $13.44.

And then there's Hewlett Packard ( HPQ). They rejected WinRT right from the start. This month they're rolling-out their 2013 line of computer products and there's still no RT. Today they introduced the new Split X2 - a tablet/laptop hybrid. It runs on the full Windows 8 OS. There's also a new SlateBook x2 Android OS ( GOOG) talet hybrid. No Windows RT devices on the horizon. Why bother?

I think both companies are on the right track. Windows RT is the version of Microsoft's legendary operating system that was made to run on ARM ( ARMH)-based processors. To differentiate it from their Intel ( INTC) processor-based, full blown Windows 8 they disabled third-party downloads. That means you're stuck with whatever is offered by Microsoft and nothing else.

When they first announced the RT operating system I thought that the restrictions were crazy. It's Windows but you can't really do everything you might need to do on a Windows computer. Obviously, the computer-buying public feels the same way.

On the upside, Microsoft has been busy working on an upgrade to both versions of the OS. It had originally been codenamed Windows Blue but will officially be offered as a free upgrade called Windows 8.1. A preview version is rumored to be coming next month. The full version "later this year". It's not soon enough. Whatever they ultimately change, they must bring back the famous "Start" button - and its full functionality - to both versions. They need to offer the classic Windows home screen as the default start-up view. I understand the appeal of a boxy "Metro" layout on all Windows hardware but I think it works better on their smartphones.

Microsoft has to help manufacturers permanently lower the price of Windows RT devices. The new $300 starting price of the Dell product is a great start. Tablets running a crippled version of Windows cannot sell for more than $500. Especially in a world of some great, sub-$150 Android tablets.

Desktop and laptop computers are no longer the hot items they've been in the past. Subsequently, Windows software is no longer the cash cow it once was for Microsoft. The upgraded versions of the OS, promised for later this year (in time for the holiday shopping season), need to do give buyers a reason to keep using Windows.

--Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's senior technology correspondent.