This is similar to the webOS pre pricing issues, and the HP webOS tablet pricing issues.<p>IIRC, someone from HP was quoted as "The market has determined that the price for tablets is $499". Couldn't be more wrong. It's determined that the price for iPads is $499. Effectively there wasn't any other 'tablet' market to speak of at that point (still isn't much outside the iPad even today).<p>What happened during the HP touchpad firesale at $149 - they <i>flew</i> off the shelves. For various reasons, of course, but many people would love a decent 9-10" tablet for under $200 (I dare say even under $300). The HP touchpad at $299 would have been selling at a loss to start with, no doubt, but HP (or palm before them) could have figured out a way to monetize that space outside of just hardware sales - content sales, app sales, etc. Getting, say, even a few million sold in a quarter would have demonstrated it as <i>some</i> competition to the iPad. Instead... everyone is focused on pricing to meet the iPad (or playing around with $20-$50 differences), which will doom these to failure.<p>Surface looks neat, but they can't sell these at $499+ and make serious inroads in to the tablet market. $299? Sure, but even there, we're going to see a smaller form-factor from Apple in the next few months (according to rumors) which will probably be at that price point.<p>Re: the Zune debacle - I don't understand why people didn't realize in 2007 that Apple already had 5+ years of an entire ecosystem built up around their device - cables, chargers, add-ons, etc - hotels with ipod docking stations, etc - trying to compete with something <i>that</i> entrenched in society by matching on price? Without any other intangibles on your side? And with a history of already ditching your previous 'plays for sure' campaign leaving earlier adopters high and dry? I really really really don't understand big corporation groupthink, and this Zune fiasco was just one example in a long line of ipod-competitor-wannabes.
One other problem I see is why would people spend the same money for the Surface as the iPad, when Microsoft has a history of abandoning their products?<p>People have already seen the demise of MSFT's Zune products, RIMM's Playbook, etc. If I'm going to choose between an iPad or a Surface, and they are the same price, will I really gamble on the Surface when I know it might not be around 1 year from now? I <i></i>know<i></i> the iPad will be around. I can't say the same about the Surface, and if it's gone quickly, then I will kick myself for not buying an iPad.<p>This is something that the Amazon Kindle Fire did right. They priced it low enough so that there isn't as much risk, and their Kindle brand makes me believe it will be around for a while.
They absolutely need to price it low for their own sake.<p>The point of the initial surface tablet, and Windows RT itself is to force devs to develop Metro apps so that Windows 8 can have a compelling tablet experience.<p>The end game is not Windows running ARM, it is Windows on x86, even for tablets. Intel seems to have finally gotten it together and is releasing price/performance/power competitive mobile chips. A year from now I would expect very few Win RT devices to sell for over $400. There just won't be any reason to run an ARM Windows device with its limited app compatibility.<p>That said, MS can't jump out of the gates and push people to x86 now or there wouldn't be enough of a reason to develop Metro apps instead of traditional desktop ones. And if there aren't Metro Apps, the 'switch-ability' of Windows 8 is of little value.<p>So I guess my overall point is that the Surface RT had better be cheap or it puts Windows as a whole at risk.
The margins on the iPad are rather substantial. I don't see why the Surface can't give up 50% of the margin and still be OK (although they don't have the economy of scale or supply chain infrastructure as well understood).<p>I'd like to see the 16GB RT come in at $429 (why is +8GB so expensive on tablets and phones, but cheap when I go price it in the market?).<p>The Surface Pro should find some way to start at $699. That might be a no frill version.<p>And they should make sure that they sell the cover/keyboard separately. That way it keeps the "price" of the device down.
He certainly brings up good points but he completely ignored the fact that the Zune was never aggressively marketed.<p>Is it fair to say that the Zune may have done far better if people even KNEW how it was better than an iPod? A lot of non-tech people probably hadn't even HEARD of the device!<p>Ultimately I think the Zune failed because few people knew it existed, and fewer still knew how it was better than an iPod. If everyone knew it (a) existed and (b) was better than an iPod then I don't think the pricing of it would have been a big deal.
Microsoft shouldn't just look at the iPad, it's short-sighted. The reality is that Android has become the most common OS on smart-phones and both Google and Amazon are subsidizing tablets so that lots of people are able to buy their first ones with Android cheaply.<p>When it's time for these people to buy their second tablet, which one do you think they will choose: a Surface, an iPad or one of the many available ones with the OS they know? A classical Microsoft strategy turned against them.<p>It's not enough to compete with the iPad on price. If Surface is cheaper than the iPad, but the Kindle Fire and Nexus 7 are cheaper than both of them, people will buy the Android ones, and probably no feature will change that.<p>Apple is comfortable with their first-mover advantage and respected brand, they can continue selling devices with high margin profits to people with disposable income as long as they don't damage their brand with a poor product.<p>Companies using Android are comfortable selling in bulk and making tiny profits with each device.<p>Microsoft cannot be Apple, they are entering the market almost three years late. They should compete with Android subsidizing heavily their tablets or risk becoming a niche product on this segment, as Windows Phone.
Couldn't agree more. If you're going after the iPad, you have to compete on price. There's no way enough people will choose Surface over the iPad for the same amount.<p>The bigger question, for me, is the pricing on the Pro model. While the RT model is more comparable to the iPad, the Pro model could be the real gem of the tablet space. I really want one, but it's possible they will price it higher than is reasonable.
Initial price is critical because initial reviews and overall reputation will be based on that. Nexus 7 shows that pricing cheaper doesn't harm the product perception if it is clearly a good product.<p>The other issue if pricing is deliberately set with particular reference to the iPad is that it might need readjust everything when the next Apple product arrives.<p>The main thing they need to do is show that it a really great product. If it is better than the iPad at three things but there is on dodgy aspect that is what everyone will hear about.<p>Who is the target market for the Surface? Those who would otherwise get a Netbox/laptop? Existing iPad owners? Current Windows users with no tablets? Mainly business?<p>I think if they want to hit the non tablet owning consumer they need to offer better product than the Nexus 7 at pricing just a bit higher. I don't think that they can match price with the iPad for that market unless people are treating it as PC replacement (which is dangerous ground for Microsoft but may be the correct self disruption move in the innovator's dilemma.
As a technologist, I hope most people can see the real value being added by the Surface over the iPad, and I think the corporate / enterprise angle is being lost entirely in this analysis.<p>On the other hand, you're absolutely right about Microsoft taking a loss to gain market share. Xbox was first, and is now the most popular gaming console in the world. Then is Bing, which despite not yet turning profitable for Microsoft did prevent Google from attaining a monopoly and has made Microsoft the only other company with a legitimate index of the internet and reasonable market share in search. I can definitely see Microsoft taking some hardware losses on the Surface to plant the seeds for the Windows 8 ecosystem.
One of the comments in the article suggest something interesting: how about pricing it at $200 and adding a $10 - $20/month subscription to Microsoft services. Perhaps Xbox Music/Video or Xbox Live Game of the month or extra SkyDrive storage or Office 365 services.
Nice Analysis! Shouldn't the pricing take into account the Nexus 7 as well? Even priced at $400, the surface will still cost the price of two Nexus 7's.<p>It looks like a race for the bottom on the pricing of tablets these days!
I disagree, if your going for the value play, you can always get the nexus 7. MS has to differentiate by showing how cool office optimized tablet version is. However, it looks like MS has dropped the ball again if the reports of office on the tablet being a half assed port are true. Using the Nexus 7 just shows how crappy the app experience is relative to iPad.
MS just combined 2 different form factors into one. They are so unique at this point in time. People just have to realize the productivity differences and shell out the dough for an increase in computing quality.
So the author claims that if Surface is as good a device as the iPad, <i>even if it has the same price point</i>, that is too high a price point. But I don't agree that the dilemma is so similar to iPod vs Zune.<p>The iPod/Zune content environment was <i>music</i>. Yes, iTunes was (to the general public) a pretty good music service that locked you into the iPod ecosystem. But in general, people already had/could get digitial music. They just needed a great portable device. The Zune was not a better device than the iPod, but even if it were equivalent by some objective standard, people will gravitate toward the leader, all other things being equal. And unless they were locked into the iTunes music system (and if they were, then they're already an ipod owner, so not really relevant to the question), consumers could port their music to either iPod or Zune and get roughly the same listening experience.<p>So without a financial incentive, why go Zune?<p>But in the Surface vs. iPad debate...Tablets are still a relative niche market compared to the number of people who own/use a regular desktop/laptop. iPads absolutely own the tablet market, but there's still plenty of room among regular computer users who have been waiting. Moreover, there are people who are still hesitant to live Mac/PC dual lifestyles (even though that's not an issue for any experienced computer user).<p>And most importantly, there is software that is entirely exclusive to Windows systems, not least of which is Office.<p>If it were possible to only play Beatles and Lady Gaga MP3s exclusively on Zune, isn't it feasible that Zune would've gained a greater foothold? In the tablet wars, Microsoft has the power to choose which platforms its popular software will run. And considering the market penetration of Word/Excel/etc., even as Google Docs and other alternatives grow, that ecosystem is much more prevalent a feature than it was when it was Zune vs iPod
Can we please stop this errant speculation until pricing is announced? No one, except a few people in Microsoft have any idea what it's going to be priced.<p>edit: Sorry, feel free to downvote, didn't want to distract from... you know.