Microsoft’s Surface for $499 is a statement they won’t Nexus 7 their partners, unless forced to by low sales

Staska  By on 16 Oct 12

Microsoft has announced the pricing and availability of its Surface tablet.

The Surface will launch on Oct. 26th in Microsoft Stores across U.S. and Canada. Also online in Australia, Canada, China, France, Germany, Hong Kong and the United Kingdom.

The cheapest 32GB Surface RT will cost US$ 499, without Touch Cover. Other prices are:

So, the cheapest Microsoft Surface with the new Windows 8 RT OS will cost the same $500 as the new 11” iPad. Did you expect less? More? Something like $199? Or $599?

Well, I guess there were a lot of discussions inside Microsoft about how to price their first tablet device. And a lot of price points were banded about. $199 for an entry Surface RT always sounded too crazy for me. But I think $299 and $399 price points were seriously considered in Redmond, and ultimately discarded. I can’t say whether going with $499 retail tag was a right or wrong decision, we’ll have to see how what the initial sales are. But I can certainly understand Microsoft’s reasoning behind it.

Apple has set the $499 ceiling with iPad. This is the most you can charge for an entry-level 11” tablet and (maybe) get away with it. So the only way for Microsoft to go with Surface price, was down.

But, while Microsoft may have some big plans for the Surface in the future, it is too early to do that with the first generation device. Microsoft simply does not have the distribution and support infrastructure for a major retail push, yet. It needs OEM partners to move the new Windows RT tablet OS into the mainstream. When you need a partner, destroying his hopes to make any money from the new category of devices, is not the way to go. For now, Microsoft Surface is just a good kick in the behind for Microsoft OEMs to step up their tablet game. Especially since Surface is available only through very limited, Microsoft owned, retail channels.

There will be time for price dumping if both – partners and Microsoft –  fail to make any significant inroads into the tablet market in the next few months. Even Google didn’t try to pressure its OEMs on prices, until it lost any hope to break iPad market dominance any other way. And, by releasing Nexus 7 for $199, it effectively created a price ceiling for 7″ Android tablets. A ceiling, where hardly anyone can make any money, at all. I am still not sure that sucking out all profits from Android tablets will not hurt Google’s position in the long run.

Yes, both Amazon’s Kindle Fire and Nexus 7 demonstrated beyond doubt that there is a market for 7″ tablets at $199 and below. But nobody got there yet with bigger, 10″+ slates. And, for the Google’s Android ecosystem  as a whole, it is still an open question whether an early price war was a good thing or not.

Lets be honest here. If you are in the market for an iPad, I don’t think your will pay much attention to Windows or Android tablets, even if they are priced at $399, or even $299. If you are seriously considering the Surface, the $499 also won’t be a big issue. It is the reference device for the whole WindowsRT category, after all. And there will be cheaper alternatives available from other Microsoft vendors.

Microsoft made a bet today to position its Windows RT tablet as an iPad alternative on its own merits, not price. They will throw some serious marketing money to convince us that Surface and other Windows tablets are at least iPad equals. Will they succeed?

We’ll see in a few months.

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  • http://www.facebook.com/datsamegui Dat Same Gui

    Something tells me it wont be as big as microsoft thought it would be, I think most people thinking of buying it were kind of on the fence, waiting for the price, everyone was expecting 299-399, I think we will see a price drop soon. I kind of hope the RT fails so Microsoft will realise they need a better competative price and will maybe price the Pro version more competativley, which I’m hoping to get if the price is reasonable,

  • truthguy

    Compared to ipad :
    More memory, HDMI, MicroSD, USB, Office RT.
    Compared to Android tablets :
    2 Gigs of RAM, fluid experience, Sturdy design, Unlike some of the kindles and nexus, this is NOT ad supported. Premium feel. Id preorder this without doubt.

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