Let’s agree on one thing right now – whatever the price of the Surface is there will be an uproar. You agree with me, right?  OK let’s break it down, working off the the WinRT 32gb wifi version. It’s a 10” ARM based tablet and what do those cost? Let’s see, the iPad  starts at $500 for the 16GB version. Let’s peruse some Android tablets and…yeah $500 gets you a new CPU and $400 gets you an older model. Ok but what about the new Win8 tablets that are available for pre-order?  Asus Vivo RT is $600 for 32GB. I know I heard more numbers and they all felt in line with Android tablets.

But wait, we heard that the Surface was $300, right? OK enough background, let’s do this:

If the pricing comes in at $300 it turns the market on its head. It’s clearly cheaper than the rest of the market for the product regardless of OS. And while the fans will go crazy it will also ruin relationships with OEMs. It’s one thing to compete with them but it’s another to blow them out of the water by cutting your price to half of theirs after getting them all excited to partner with you on this new journey. The more I think about it, the more I think $300 is not the price.

Let’s do $500. That’s quite possible. However, it’s $200 more than Ballmer told us it was going to be, right? I mean, that’s crap. We were told we were getting a $300 tablet and that’s why I keep throwing my money at the screen.  [And yes there’s irony in ‘told’ ] However, it’s still cheaper than the market for this hardware set and it’s priced a lot better than an iPad. Yes, a lot. The build quality on the Surface is insane. Add to that the included cover and  there’s a premium piece of software included(yes Office I’m talking about you). But of course, the printed price of $500 is the same as an iPad so it’s not cheap enough (to the masses that compare things on price, not specs/quality).

OK but what about $400? That’s an oddball number. You rarely see items sell for numbers like $400 because mentally it’s a number that sounds expensive. Anyone in sales chime in here but there is a psychology to pricing and it’s the sort of number that sounds expensive while being relatively cheap. Where $300 seems relatively inexpensive, $400 feels relatively expensive. And if you’re willing to pay a premium then you’re likely to get up to $500 at that point. It also misses a niche. It’s north of the promised $300. It’s a bit too competitive to make OEMs happy. The one redeeming fact is that if a Kindle or Nexus 7 cost $200 to build then at $400 (yes larger screen and battery, better quality, etc) you can imagine MS can both make a tablet and make a few dollars, even if it’s slim. And yes, put it on the Best Buy ad next to an iPad and it’s cheaper.

Bottom line is they need to compete with Apple first because if they lose that battle then psychologically they have lost a big war. And that doesn’t mean outsell them. It means gain significant mindshare. They also can’t do this at the expense of their partners unless they really want to have an anti-trust suit commenced.

So ignore what you’re willing to pay and think about where the market is and where MS is. Where do you think they come out? Shocked at your own conclusion, right?

For bonus points, how does the pricing of the other non-existent, unpriced and to be released tablet change your thoughts? Yeah the iPad Mini and it’s cheaper pricing and will be announced days earlier. Lots of movement…I know.  Also evidence that Microsoft should start pre-orders now before we know the pricing of the Mini but that’s a separate matter altogether.

5 COMMENTS

  1. I have a feeling it’s going to be expensive, for two reasons:
    1. They won’t undercut their “partners” who are already uneasy about the Surface cutting into their sales as it is and Windows 8 under-performing altogether.
    2. They are delaying the price announcement. If it was crazy-inexpensive they would have announced it months ago at the initial reveal. Just like Microsoft did, waiting until the last minute, to announce that older Windows Phones would not be upgradable to Windows Phone 8 OS, I think this is another instance of them saving the bad news for last minute so it has little time to fester with consumers before the product is available for purchase.

    There is enough hype built up around Surface as it is, at least in the tech community, that if they wait until 10/26 at midnight for us to learn in a tweet from the first person to walk into a Microsoft Store that it costs $499 or more for the 16GB Surface RT, I think many people will still visit stores to check it out and inevitably walk out with one after using it. If those people found out two or more weeks in advance, I doubt they’d be as compelled to go to the store and see it if they’ve already made up their mind that it’s too expensive in advance.

  2. Well stated, and as this morning’s news has revealed, accurate.

    Have you ever considered writing as a hobby?

    • I guess I wasn’t too far off. Though in this case, I would have preferred to have been completely wrong. I’ve never thought about going into writing, but now that you mention it I can’t say I wouldn’t consider it.

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