Print 104 comment(s) - last by TakinYourPoint.. on Oct 17 at 4:27 PM

Microsoft targets iPad pricing

Microsoft has gone official with pricing on its Surface RT tablets. Most people have been hoping the Microsoft Surface RT tablets would come in at less than Apple’s hugely popular iPad. However, Microsoft’s pricing puts Surface in close competition with comparable third generation iPads and higher than the iPad 2.
The 32GB Windows Surface RT tablet without the Black Touch cover, which also doubles as a keyboard, is $499. That makes it $100 more expensive than the entry-level Apple iPad 2 at $399. The $499 entry price for the Surface RT tablet puts it on par with pricing for the 16GB “New iPad”.
If you want the Touch Cover with its integrated keyboard, that option is $100 when you order, or $119.99 as an add-on later. You can pre-order the 32GB version with the cover for $599.
The third version has 64 GB of storage and ships with the Touch Cover – it will cost you $699. Any of the three tablet versions can be pre-ordered today with delivery expected by October 26.
Analysts seem to think that Windows 8 tablet pricing is too expensive, however, what do you guys think?
In other Surface news, you can catch Microsoft’s first ad for the new tablet here:

Source: Microsoft

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What an interesting experiment
By Tony Swash on 10/16/2012 12:55:19 PM , Rating: 1
Microsoft can see the writing on the wall - finally. The days of growth in the PC market are over, what looms is at best stagnation in units sold and probably gentle but persistent decline. On top of that the generous mark up for software that MS has enjoyed for so long will also decline as the vast inexpensive app markets come to dominate and define software pricing.

So now Microsotf has to do two very difficult things at once, both things it has never done before.

One is to make and sell hardware at a reasonable profit and in numbers that matter. Selling lots of units is doable if you reduce the price until the profit disappears but that is not a road Microsoft can embrace this time round. If Microsoft is to successfully reengineer it's business for the post-PC world and shift from being a company that makes it's money from software to one that makes money from selling hardware it cannot sell at cost, it must make a profit on the hardware it sells. This becomes even more critical given the fact that a move by Microsoft into hardware is also a move away from it's OEMs no matter what Microsoft says about it. As soon as MS starts selling hardware it calls into question it's OEM ecosystem partnerships and raises the very real risk that a move towards a new business model (hardware) will undermine and disrupt the old business (software licences+OEMs).

So MS must make profits on Surface now and that is a hard thing to do because it is up against competitors such as Apple, with four decades of hardware experience and with the planet's best supply chain, and Amazon and Google, who can both continue to sell at cost because they make their income from services (their hardware is just a gateway to their services).

The second very hard thing that Microsoft has to do is to enter markets (phones, tablets) where it is a tiny bit player and carve out a profitable and successful niche for itself without the benefits of incumbency that it has enjoyed for so long in the PC world. Microsoft hasn't really had much experience at doing that, of entering and growing and making profits in existing markets. The Xbox in the console market wasn't really the same because Microsoft could sell it at cost (in fact make a pretty big loss when all it's capital costs are factored in) because it was seen as loss leader forging an entry to the lucrative living room. Microsoft is not looking for another loss leader, it's looking for another profit centre.

Microsoft's strategic response to this new challenge, of entering and succeeding in a new market full of dynamic incumbents, was Windows 8, an attempt lever it's position in the PC market to build instant installed base so that it's tablet and phone offerings could ride the on the back of it's PC business and attract developers, enterprise customers and generate some traction. It might work but the danger is that in reshaping Widows 8 to help its touch based devices MS will kill the goose that, for now, is still laying the golden eggs. If Windows 8 causes a stutter in it's desktop market whilst not leading to a tablet and phone take off MS could find itself in a difficult position.

The next eighteen months are going to be very tense times at Redmond as they wait to see if it all pans out.

How very interesting.

RE: What an interesting experiment
By PsychoPif on 10/16/2012 1:49:53 PM , Rating: 4
Yes it's a big transition for MS, but you got one thing wrong.

Just like Apple and Google, MS get his own marketplace with a 20-30% cut from everything sold there. It's also a great opportunity to promote Bing, Skype, Skydrive, etc. It also consolidate the whole ecosystem. XBox, Windows Phone, Surface, Windows 8. A user can have a real integrated experience with MS starting octobre 26th.

It also has a lot of experience from XBox, a device many said would tank, yet is now the #1 console on the market. Don't underestimate them.

RE: What an interesting experiment
By 91TTZ on 10/16/2012 2:36:54 PM , Rating: 2
The problem is that many people don't want an "integrated experience". They just want a damn PC or tablet that does what they want it to.

Right now we're not locked into any crazy agreement with Microsoft as far as software distribution goes. Anyone can make a Windows compatible program and distribute it on their own site for free. If Microsoft wants to take a 40% chunk of whatever you make, nobody is going to use that method compared to the free method.

By Tony Swash on 10/16/2012 3:15:59 PM , Rating: 1
Just like Apple and Google, MS get his own marketplace with a 20-30% cut from everything sold there. It's also a great opportunity to promote Bing, Skype, Skydrive, etc. It also consolidate the whole ecosystem. XBox, Windows Phone, Surface, Windows 8. A user can have a real integrated experience with MS starting octobre 26th.

The problem is that the digital content does not generate big profits, in fact it's little more than break even. Even iTunes is not much better than a break even operation designed to add value to hardware (where Apple's profit are made). Amazon who sell a vast emporium of stuff only make razor thin margins doing it. Google of course makes plenty of money on its ads business but all the indicators are that that is primarily still a desktop/browser operation and that ad profits from mobile devices are elusive for Google.

So what on the content side offers Microsoft sizeable profits?

Remember that Microsoft needs to develop a big new profit center in the new mobile market if it is not to see it's growth stagnate along with the PC market. It's that imperative that is driving both Windows 8 and Surface.

RE: What an interesting experiment
By Moishe on 10/17/2012 2:50:15 PM , Rating: 2
At least you're the same guy. That's cool.

Apple innovates (or not), you love it.
Microsoft innovates (or not), you hate it.


"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
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