Is a price drop incoming for the XB1?

[Arkaign]

No, that's not even remotely accurate on many levels.

First, businesses are not replacing desktop PCs with tablets, that's patently absurd.
Second, businesses are not overwhelmingly replacing desktop PCs with laptops, but even when they are (not often feasible due to higher cost, lower productivity due to small screens and lower reliability), they are replacing them with Windows laptops, which essentially serve the same purpose. OSX has very little footprint in the business sector.

Tablets and convertibles are consumer-level devices for the most part. Surface Pro series is interesting, I just deployed 8 of them this past week for a particularly interesting firm, but they are companions to their desktop units, not replacements. Ironically, their previous configuration was exclusively Toshiba ultrabooks, but now they have Desktops with multiple displays for in-office use, and the Surface Pro 3s for road use, already packed and ready to go, zero disconnection/hassles involved in coming/going from the office.

All that is immaterial though, the VAST bulk of business PCs sold are chosen for large firms by an IT director with consultation with the CFO and budget managers, and the individual worker has zero choice on what it's going to be. You are simply issued one, and you get what you get. We're talking large firms here : GM, Toyota, Raytheon, TI, etc. I know because I've worked for most of these firms in a consultant basis over the past two decades in that capacity.

None of that matters though, because Microsoft is a corporation that is publicly traded, and the investors themselves WILL rebel and lose confidence when XB1 losses start mounting. The patience isn't there any longer for it, the promise of a major payday has evaporated, and the 'cohesive ecosystem' they were after is being dismantled as we speak. The investors have a point, energy and capital is being expended in areas that have never shown a fraction of the profit or importance in contrast to their enterprise efforts, and continuing down the path shows no light at the end of the tunnel.

The best argument I've heard from a significant Microsoft investor can be summarized like this :

The consumer is no longer relevant to us. They are fickle, they can come and go, and the number of competitors that can capture or divert our market penetration in any consumer-facing area are many. To chase this end of business is a race to the bottom, most especially in hardware. On the other hand, enterprise and backoffice are both our primary strengths, as well as our most potent potentials for growth and supremacy as long as we invest and maintain properly. Google is a potentially deadly thread in this area, far more dangerous than any other entity on earth.

By controlling a dominant sector of the world's servers and backoffice products, in essence Microsoft OWNS the game without ever having to even have a public face or consumer products. Desktop PCs to home users can evaporate, Apple and Samsung can own the tablet game, but everything that these consumers do online, the email that they use, the encrypted cloud storage, the software and networks that their banks use, all of that can be fully dominated by Microsoft if they redouble their best talent and capital towards those ends. A race to the top, as it were.

Ironically, Apple has shown them a way in the manner of PC vs. Mac sales. Apple sells FAR FAR fewer Macbooks and Mac Pros than any of the large PC OEMs. But the BoM vs. ASP of these reflects Apple profiting HUGELY by focusing on a premium market who will pay the price.

Who will pay the price for Microsoft's premium/premier backoffice and server expertise and products? Not consumers, but the mega corps practically throw bags of cash at Microsoft for the gifts of using their products and services. Why? Because they're the best in those areas, and a better backoffice/server product enables greater data availability, flexibility, expandability, and at the end of it all : productivity vs. investment return.

It's all money.

Money thrown away on something exposed to be a downward spiral, will that continue on some hare-brained scheme to capture the minds of fickle consumers? No, it won't.

Any idiot can read a quarterly or annual report from Microsoft and see where their bread is buttered, where the threats are, and what they must do.