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6/22/2012
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Microsoft Surface To Start At $599?

Microsoft risks alienating everyday consumers by pricing its self-branded tablets at a premium, analysts say.

Microsoft Surface Tablet: 10 Coolest Features
Microsoft Surface Tablet: 10 Coolest Features
(click image for larger view and for slideshow)
Microsoft plans to introduce its Surface tablets later this year at prices starting at about $600 for the entry-level version, according to a published report. If accurate, the Surface line could have a tough time competing against the iPad and Android tablets, according to some analysts.

Surface for Windows RT, which uses mobile chips designed by ARM Holdings and runs Windows 8 RT, will be priced at a minimum of $599, according to DigiTimes, a Taiwan-based publication that closely tracks the nation's PC components industry. Surface for Windows 8, which runs a full-blown version of the Windows 8 operating system and is powered by Intel's Ivy Bridge architecture, will start at about $799.

Microsoft has tapped Taipei-based Pegatron to build the devices, DigiTimes reported, citing unnamed sources.

If the report is correct, Microsoft could have difficulty convincing consumers to choose its untried platform over established devices like Apple's iPad. "Their high prices are expected to become the biggest obstacle in the market," DigiTimes said.

Indeed, the iPad carries an entry-level price of just $499. Amazon's Kindle Fire, which runs a customized version of Google's Android OS, sells for just $199.

[ Microsoft tablets will have to deliver on value and performance to compete with the iPad. See: Windows 8 Tablets: Will The Price Be Right? ]

Earlier this week, NPD DisplaySearch analyst Richard Shim said Surface tablets may not be for everyday consumers. "It is likely that Microsoft's ARM-based tablet will be targeted for the high-end of the market," said Shim, in a blog post.

Microsoft may have little choice but to price its first tablets at a premium. If it's too aggressive on pricing, it could undercut Windows 8 tablets from hardware makers like Dell, HP, and Lenovo, on whom it still depends to produce mass-market and enterprise Windows PCs and laptops.

Adding to the inherent cost of Windows RT tablets is that they will all come with a touch-optimized version of Office 15 preinstalled. While that may appeal to power users, it likely won't be much of an incentive for everyday consumers, who use tablets mostly for Web surfing and social networking, to shell out for a premium product.

For its part, Microsoft has not yet revealed its pricing plans or a ship date for Surface. Most observers, however, expect the tablets to debut sometime in the fall. The company has all but finished work on the Windows 8 operating system, so now it's just a matter of pairing it with hardware and finalizing a distribution plan.

At this year's InformationWeek 500 Conference C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.

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Bprince
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Bprince,
User Rank: Apprentice
6/23/2012 | 2:38:27 PM
re: Microsoft Surface To Start At $599?
If that price is correct, I have to agree with the analysts and say Microsoft will have a tough time going head-to-head against the iPad in the consumer market. If it is targeted aggressively at the enterprise, that might make up for that if businesses are supplying the devices to their employees. Still, that's the reverse of the bring-your-own device trend that has been taking place, which makes it seem like a higher hill to climb than getting businesses to support devices their employees already have. Time will tell though.
Brian Prince, InformationWeek/Dark Reading Comment Moderator
jcolinger3
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jcolinger3,
User Rank: Apprentice
6/22/2012 | 8:40:46 PM
re: Microsoft Surface To Start At $599?
$599 starting price? Consumers AND business people are looking for value, and I don't see a compelling value here. Surface will certainly sell units to Microsoft-centric organizations, and there are a lot of those.

My initial reaction to the pricing is that Microsoft will not be able to compete with Apple or Android at that price(s). Maybe their strategy is to get in the game and be a catalyst for Windows based tablet innovation. For that, I give them credit. There is certainly room for more choice in the tablet product market.

But more likely, the Surface tablet will be a good product platform that will be an average seller due to the price, lack of complementary app/entertainment ecosystem (i.e. iTunes, Play), being late to the party, and the fact that they've announced it before it is available (http://en.wikipedia.org/wiki/O....

Integrating Surface with XBox in an innovative and "must have" way would be the strategy I suggest on the consumer side. Office apps and laptop replacements will take care of the business side. Work to undercut Apple pricing and take some market share.
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