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6/21/2012
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Microsoft Surface Too Pricey For Consumers?

Office 15 bundling, plus Microsoft's desire not to undercut its PC-making partners, could limit Surface tablets to market's high end, NPD analyst says.

8 New Windows 8 Tablets
8 New Windows 8 Tablets
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Microsoft's Surface tablet, unveiled Monday at a hastily convened press event in Los Angeles, may be too expensive for the average consumer, given the cost of components and software, according to an industry analyst.

"It is likely that Microsoft's ARM-based tablet will be targeted for the high end of the market," said NPD DisplaySearch analyst Richard Shim, in a blog post.

The ARM version, Surface for Windows RT, uses the Windows 8 RT operating system and energy-efficient chips designed by U.K.-based ARM Holdings. Microsoft is pitching it as a direct competitor to Apple's iPad and tablets that use Google's Android operating system.

But Shim thinks Microsoft will have a hard time matching the $399 entry-level price for the iPad, and that it will be even more difficult for the company to compete with Android-based tablets, such as Amazon's Kindle Fire, that sell for less than $200.

Even though Microsoft won't have to pay a Windows license fee for its tablets, the company can't be too aggressive on pricing or it will alienate longtime hardware partners, like Dell, HP, and Acer, who do have to license the operating systgem. It's generally believed Microsoft wants to charge OEMs about $85 per unit to license Windows 8 RT.

[ Windows 8 tablets will need to take off with consumers before CIOs embrace them. See Microsoft Surface: Enterprise Tablet Market Isn't Enough. ]

"Microsoft is likely to face similar pricing challenges if they don't want to upset their hardware partners with an aggressively low price point," Shim said. The risk: If Microsoft undercuts OEMs on tablet pricing, it could drive them into the Android camp.

Microsoft's plan to include a touch-optimized version of Office 15 in Windows 8 RT tablets, including Surface, could also add another layer of cost that might limit the devices to power users.

"Bundling Office with Windows RT will likely push the bill of materials for the tablet up to the point where it will not be price competitive at the low end of the tablet market," said Shim.

The other version of Surface, which will run a full blown version of Windows 8 on Intel's Ivy Bridge architecture, will be even more expensive than the Windows RT edition.

The upshot, according to Shim, is that Microsoft Surface tablets aren't likely to produce blockbuster sales when they debut later this year. "It will likely be a slow build to significant influence for Microsoft in the tablet category," said the analyst.

Microsoft itself has not confirmed any pricing details for its Surface tablets.

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Cartman4life
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Cartman4life,
User Rank: Apprentice
6/25/2012 | 2:28:18 PM
re: Microsoft Surface Too Pricey For Consumers?
I don't know, I think that your assumptions are not fair at all. What line of business are you in? How much legacy software do you have to support? How frequently does content (such as PDF's and other documents need refreshed? We have ritualized out many of our application and found ways around most of the issues that we had. Were they hard, no, should we have had to find work arounds for common business procedures? No. Our sales staff use iPad's and love them, but for them, the vast majority of what they do involves presentations and checking email, no exactly technology intense tasks. I've setup many smaller entities with complete iPad setups and it was pretty painless, just not at an enterprise level, specifically with the technology we use.
amacdougall064
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amacdougall064,
User Rank: Apprentice
6/23/2012 | 12:47:05 PM
re: Microsoft Surface Too Pricey For Consumers?
As someone in a business environment who has successfully implemented iPad with no difficulties, I have found most people who talk about how difficult it is to integrate the iPad into business haven't actually tried. We use our iPads for communication, business applications, and server management. I'm in IT, and our iPads have reduced our customer response time and improved resource uptime and availability. If you can't can do your business on an iPad then respectfully, you either don't know what you are doing, or you're intentionally trying to make it difficult.
Cartman4life
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Cartman4life,
User Rank: Apprentice
6/22/2012 | 6:01:05 PM
re: Microsoft Surface Too Pricey For Consumers?
Now let's just hope that Microsoft does not go Windows Me on this OS. I also like the they are bringing Windows Phone 8 in line as well.
Xelaxu
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Xelaxu,
User Rank: Apprentice
6/22/2012 | 12:29:48 AM
re: Microsoft Surface Too Pricey For Consumers?
Sounds like you didn't read the comment you think you're agreeing with.

It's a genuine pain to try to get the iPad to perform for even the most basic business needs. The iPad is a toy. The Surface x86 sounds like it might actually be able to DO stuff. I agree with Cartman -- we've been waiting for something like this.
PJS880
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PJS880,
User Rank: Apprentice
6/21/2012 | 6:23:25 PM
re: Microsoft Surface Too Pricey For Consumers?
You are absolutely correct. Businesses want to plug and play, they do not want to Gă jump through hoopsGăÍ as you stated. This is probably a large part of why businesses are going to choose the Ipad over the Surface. Great points!

Paul Sprague
InformationWeek Contributor
Cartman4life
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Cartman4life,
User Rank: Apprentice
6/21/2012 | 5:54:01 PM
re: Microsoft Surface Too Pricey For Consumers?
I don't believe that Microsoft is counting on consumers to make this tablet successful. Business have been waiting for a tablet that will allow them to simply and efficiently integrate tablets into their environment. You can do this with iPad with 3rd party tools and jumping through a bunch of hoops, but if they do a nice job of letting business users do what they want to do, they will own the business market. If I had to choose between the Windows 8 tablet provided to me by work or buying a iPad for myself, well that is a no brainier. I know personally we have been holding off on buying iPad for our sales reps to see if the Windows 8 tablet will meet our needs and I believe a lot of other businesses are in the same boat.
PJS880
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PJS880,
User Rank: Apprentice
6/21/2012 | 4:46:30 PM
re: Microsoft Surface Too Pricey For Consumers?
Microsoft will have to price this unit in the price range of $175-$400 to be a competitive tablet. If not and it gets priced to high and is aimed at the higher end of the market, potential customers are going to purchase the Ipad. If they want this tablet to be successful give the users all the features that it currently has and give it a great (cheap) price. Has anyone heard what the price is that Microsoft is charging? The potential high price is the only downside that I have heard in regards to this tablet.

Paul Sprague
InformationWeek Contributor
atriusny
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atriusny,
User Rank: Apprentice
6/21/2012 | 2:47:24 PM
re: Microsoft Surface Too Pricey For Consumers?
Office 15 is embedded with Windows RT. So any tablet runnning Windows RT will come with Office 15.
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