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On the Call: Microsoft CFO Amy Hood

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The Associated Press | October 24, 2013 07:37 PM EST | AP

One consequence of making Windows 8.1 more compatible with smaller screens is smaller prices.

The update to Microsoft Corp.'s flagship touch-enabled operating system released this month will work on smaller tablets that have screens measuring 7 or 8 inches diagonally.

Such devices are cheaper than both full-blown computers and full-size tablets such as Microsoft's own Surface line.

Microsoft Chief Financial Officer Amy Hood acknowledged that by going after the fast-growing market for smaller tablets, the average selling price (ASP) for a Windows license on each device should go down in the long run.

QUESTION: You talked about the entry of a lot of new (stock keeping units) coming out for the holiday season. As we start thinking about building our (original equipment manufacturer) models, how do we think about ASPs for this 8-inch-and-below category that you referenced there's a lot of product coming out with?

RESPONSE: With Windows 8.1, one focus we had was to expand both the opportunity for screen sizes and to reach new price points and to cover really from the smallest to the largest with touch and non-touch. And I think our ability to work with partners and some of the sales execution we've seen in the field has led to have a broad opportunity at retail for holiday for devices.

It is important. I do hope in some ways this is a question that's a bit awkward. You always want to say on ASPs — it's good to have ASPs go up. Transparently, going forward, as we make more progress, especially in the smaller screen sizes, we should expect units to go up and be very excited about that in terms of share. But ASPs would trend down. I don't think that will have a material — our guidance does not assume a material impact to ASPs in (the fiscal second quarter). But over the long-term I actually do understand the question and would expect ASPs to be on that trend line assuming we are successful in those lower-end device sizes.