Microsoft Slips on Surface Pricing Strategy, Should Have Been More Aggressive

Paul Lilly

In case you haven't heard, Microsoft's Surface with Windows RT tablets are now available to pre-order , starting at $499 for the 32GB model sans Black Touch Cover. With the Touch Cover, the price jumps by a Benjamin to $599, and the 64GB version (with Touch Cover) is going for $699. Those are competitive price points compared to Apple's third generation iPad tablets, but as the Android camp found out, $499+ tablets are a tough sell.

Back in the dog days of summer, there was talk that Microsoft might debut its Surface RT line starting at $199. Analysts were skeptical (rightfully so, obviously), and I thought it was wishful thinking to expect such an aggressive pricing strategy, but I held out hope it would launch Surface for less than $499. Microsoft didn't, and I'm not alone in thinking the current price points are too high.

"The price [of Surface RT] meets the estimation calculated based on costs and profits, which is not particularly appealing in the market where the competition is fierce," notes WitsView , the panel research division of TrendForce. "It has limited support to lift Windows RT’s status among the tablets, WitsView tends to be conservative toward Surface RT shipments with an estimation of 2.5 million unit shipments in 2012."

Eric Chiou, research director of WitsView, believes Surface RT doesn't distance itself enough from the iPad to warrant the current price points. Sure, Surface RT has more storage space per dollar, but the newest generation iPad boasts a superior display resolution.

"Compared to iPad2, which is at the same resolution grade and priced at $399, Surface RT seems expensive with a $100 price gap," Chiou says. "In addition to Surface’s price itself, Touch Cover keyboard’s sales strategy is also quite intriguing...To show PC platform’s advantages, the keyboard is a very important control interface, however Touch Cover keyboard is not viewed as the standard accessory but sold at an extra payment of $100, reducing Surface’s competitiveness as a product featuring a PC operating system and users’ habits."

Surface RT with Touch Cover costs $599, or more if you opt for the Type Cover, which features a slightly thicker keyboard and a full row of Function keys. As nice as Surface could end up being, I'm just not sure they'll fly off store shelves at these prices, which are not much lower than where full blown Ultrabooks are headed. Or maybe I'm missing something and Windows 8 tablets will become the most successful tablets ever .

What do you think about Microsoft's pricing strategy for Surface RT?

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