Tech Strategy Trends

Jan 26 2013   12:59PM GMT

Will Microsoft slash the price of the Surface tablet?



Posted by: Tony Bradley
Tags:
Apple iPad
iPad
Microsoft
tablet
Windows 8 tablets

The Surface RT–the ARM-based tablet running Windows RT that Microsoft launched last October–has received a fair amount of praise in reviews for the quality of its engineering and construction, and the general tablet experience. However, by most estimated those favorable reviews did not necessarily translate to sales, and the Surface RT is not meeting expectations.

Why? Well, Microsoft is coming late to the party, and there are already established tablets dominating the market. Right, wrong, or indifferent, the single best way to differentiate a device in the market is price. The iPad starts at $499 for a 16GB Wi-Fi only model. The Surface RT was introduced at $499 as well–albeit for a 32GB Wi-Fi only model. As nice as the Surface RT might be, businesses and consumers looking to spend $499 on a tablet are almost universally going to choose the iPad. It has endless apps, and an established track record. It has an entire after market of gadgets and accessories. It is a known. The Surface RT is an unknown.

Microsoft missed an opportunity to capture tablet market share. It should have launched the Surface RT at $199 as was rumored prior to the official pricing being revealed–even if it meant selling at a loss temporarily. It could have framed it as a limited-time launch promotion, and then raised the price to $400 or $450 later (Going head to head with the iPad price would still be a mistake). Is it too late to correct that error?

There is some speculation that Microsoft may, in fact, sell a cheaper Surface tablet, but the evidence is sparse. The report stems from a quote from Microsoft CFO Peter Klein during the recent Microsoft earnings call promising “a greater variety of devices at a bigger variety of price points.”

It doesn’t NOT say “cheaper Surface RT”, but it’s also a bit of a stretch to jump to that conclusion.

I think the Surface RT is a very nice tablet, but Microsoft has to get its foot in the door first. Market share has a way of self-perpetuating–the more people have a given device, the more likely others are to want / purchase that same device. If Microsoft bites the bullet and cuts the price, it could build some momentum for the Surface RT that could eventually sustain itself.

I’m not sure it’s worth it, though. Or–more precisely–I’m not sure that’s the battle that Microsoft should commit its resources to.

Microsoft has a huge opportunity with tablets still. But, the real potential lies in the Surface Pro and other Windows 8 Pro tablets, rather than the Surface RT / Windows RT versions. As the tablet industry matures, and the PC industry evolves to engulf and include the tablet industry, a Windows 8 device that is a PC when you’re at your desk, and a tablet when you’re on the go meets the needs of both while providing a consistent experience, and access to all of the same software and data no matter where or how you use it.

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  • rhonin

    I checked out the RT when it launched and compared it to my Transformer (ASUS Android) and iPad2.  Due to it's lack of direct compatability with my Win8 and Win7 machines (home and work) and the fact it really provided me with a distinct advantage over my current tablets, I skipped it.  If the price point had been a deal lower, I would likely have bought one and done a hands on comparison.

    I will be looking seriously at the Surface Pro.  The RT, I see as a nice try with a limited lifespan.

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