View From Above

Nov 30 2012   10:13AM GMT

Microsoft Surface pricing dooms it to failure

Ron Miller Ron Miller Profile: Ron Miller

Microsoft Surface

Microsoft Surface Pro pricing defies any kind of market savvy on Microsoft’s part

When I heard Microsoft’s pricing for the upcoming Surface Pro on Thursday, my jaw literally dropped. Ed Bott reported on ZDNet that the pricing would be as follows:

The new Surface will debut in two editions in the United States and Canada: one with 64 GB of storage, priced at $899, a second with 128 GB for $999. Each model comes with a Surface pen but does not include Touch Cover or Type Cover add-ons ($120 and $130, respectively).

Excuse but as one friend put it when he heard the news, “Steve Ballmer must be huffing kerosene.” Even folks who were lusting for the Pro tablet have to pause when the cheapest option with cover and keyboard — and let’s face it they are selling the keyboard as a key feature — is $1149. Add on sales tax and you’re getting close to $1200. That’s not tablet pricing — that’s a pretty nice laptop and if you’re going to buy a laptop, buy a laptop. Why buy a hybrid device for that kind of money?

As though that’s not bad enough, Mary Jo Foley reports that the Surface Pro is going to have half the battery life of the Surface RT. That means 4-5 hours maximum so the Surface Pro is going to have the battery life a typical Ultrabook, which what I suspect people will buy if they want to spend this kind of money.

Microsoft has been blitzing the airwaves with Surface RT ads and word is they still aren’t selling. Last week even Ballmer himself admitted sales were off to what he called a “modest start.” That’s CEO code for we’re tanking. But the implication has always been that we really need to wait for Surface Pro to see where this is going to go.

Analyst Gene Munster claimed based on his onsite Black Friday research at Mall of America that Apple was moving 11 iPads an hour at the Apple store, while Microsoft was selling a big fat zero Surface RTs at the Microsoft Store. When I was at the SharePoint Conference earlier this month, I saw a couple of Surface RTs, but not as many as you would expect at a Microsoft-centric event. I think it’s fair to say that they aren’t selling very well.

And with these prices, it seems highly unlikely to me that Microsoft is going to move many of the Surface Pros. I can’t imagine someone paying $1200 for a tablet with 4 or 5 hours of battery life. I mean this kind of pricing makes iPads look positively affordable.

I’ve heard the arguments that this is a laptop replacement, and it’s a new kind of device, but I’m really not buying it. Let’s be honest here, the Surface is first and foremost a tablet. Microsoft created it to be a player in the tablet market and to compete with the iPad. Their strategy to is to have an operating system that has the same look and feel from desktop and laptop to tablet to phone. And the Surface family is the tablet part of the equation.

So let’s compare Surface Pro and iPad pricing. I’m going to put the iPad 2 and iPad mini aside here for comparing purposes and just use the 64 GB iPad WiFi with Retina Display. Apple doesn’t sell a 128 GB version of the iPad and the Surface Pro doesn’t support mobile broadband. Apple charges $699 for the latest iPad compared with $899 for the Surface Pro. That’s a pretty significant gap.

If you want a bluetooth keyboard and case you can get one like this iHome keyboard and case unit at Radio Shack for around $50 (and there are tons of  other options at a range of prices). That’s $749 plus tax.

Microsoft would have been far smarter to cut the prices and lose money to be cheaper or at least equal to the iPad than making the Surface Pro significantly more expensive. And I haven’t even mentioned the cheaper Android tablets at the other end of the market because this device clearly isn’t competing with those. But I’m still left wondering what Microsoft could possibly have been thinking with these prices.

I’m predicting right now that the Surface Pro will be the biggest dud since the RIM Playbook or the HP TouchPad and I’m fully expecting a similar level of success — which is to say none at all. Look for these to go on clearance by the end of Q1.

Photo by methodshop.com on Flickr.

 

6  Comments on this Post

 
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  • KnowTheLedge

    I don't think you understand. The Surface Pro is widely not considered to be an ipad competitor; it's considered to be a MacBook Air competitor because the Pro is running x86 Win8. It also ends up being an arguably better value than the MBA spec wise. Your whole diatribe here is pretty much moot because you missed the point.

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  • Ralph99
    No. YOU don't understand.  

    For $1149 (128GB model + keyboard,) you could get a really decent i5 or low end i7 notebook AND an iPad Mini or 10" Android tablet.

    But the price isn't the real issue; according to Microsoft, the Surface Pro only gets HALF the battery life of the RT! (i.e., only about 4 Hours)

    So lets see, what exactly IS the Surface Pro value proposition:
    - It's too heavy and thick for comfortable tablet use
    - the specs are wimpy for a Windows laptop (at this price point.) 
    - only half the advertised ram is actually available to use
    - It has to be used on a flat desk. (tray tables and laps are out because of the screen stand)
    - It has half the screen resolution and battery life of the iPad
    - oh, and the keyboard isn't even included.  (nice touch, M$)  ;)

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  • anotherscott
    Surface RT is designed to compete with iPad. It may or may not have any success.

    Surface Pro would compete with an iPad that could also run the same Mac OS programs you can run on an Air. But such an iPad does not exist.

    I happen to own an Air and an iPad. If Windows were my preferred platform, it seems to me that a Surface Pro could be seen as a viable and cost effective alternative to that pair of devices, and that's where their market advantage--if there is one to be found--will be.
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  • Vcpmartin
    Surface was never about price Surface was never about battery life Surface was never about disk space Surface is all about getting MS Office compatibility right If Office, proper Office is a must for you, Surface or a laptop are your only options. If you want a tablet, there's only one option
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  • ironc
    Microsoft failure denialists are some of the funniest commenters.

    Here are the numbers. PC sales have dropped ~25% every year for the last few years including this year (http://www.marketwatch.com/story/pc-market-sees-biggest-sales-drop-since-2001-2012-10-10). Including Apple's PC sales. So the whole PC market (Not just Microsoft) is dying. Where is that marketshare going? Smartphones and tablets. This is not a point of contention or debate. These numbers are not opinons. They are cold hard facts. Look it up anywhere online. No amount of denial will change those numbers.

    So to say "the Surface PRO doesn't compete with the iPad" is wrong.  The Surface pro is a thin PC. The iPad is a tablet. Tablets are devouring PC marketshare. If you were able to follow that logic chain, congratulations, you are now able to understand why the Surface is being compared with the iPad. 

    Everytime I read comments on tech blogs online, I get dumbed I swear. 



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  • Nevyn
    MS haven't really been doing well on the hardware front at all. Need I mention the Zune? Where MS really made their money was by sticking to software (the soft in Microsoft) and leaving hardware to others. Selling the OS as a separate piece to the hardware was revolutionary. Have it support an Office Suite and you're on to a winner.

    Trying to erode on Apple's market seems to be ill-fated. While there are MS fanboys out there, they're nothing compared to the might of the iSheep.

    But more importantly, MS seem to be out spec'ing themselves due to focus in the wrong area. They can't rely on a unified software platform (i.e. OSX apps, in general terms, still need to be ported to an iOS platform whereas Windows 8 apps... exactly the same platform - No porting to be done) to attract users. A crappy battery life, high prices and no real incentive to move in that direction given the other options out there leads me to think that they've got a non-user-centric focus.

    So they're relying on business users - except given MS's Beta testing seems to be done sometime before SP1 and/or SP2, without the consumer market, the platform is unlikely to stabilise to a point where it's vaguely usable in mission critical situations.

    Also, following the law of 2nd's..... Windows '95 bad, '98 good, Windows Me bad, XP good, Vista bad, Windows 7 good, Windows 8..... Wait another version before shifting perhaps?
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