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back to article Microsoft Surface: Designed to win, priced to fail

Microsoft has at last released some more details on its Surface tablet – including pricing – but based on what we've seen so far, Apple and Android-tablet makers don't have much to worry about. First the good stuff: Microsoft appears to have created a system that, on the face of it, could give Apple a run for its money – at …

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JDX
Gold badge

Come on MS

This is your biggest opportunity for a decade or longer to unleash a genuinely interesting OS, and you're screwing it up? I'm not a fanboi (for any OS) but I want MS to succeed and do something interesting.

When do other companies get to show us their versions?

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Anonymous Coward

Is it

Is it a tablet

Is it a laptop

Is it an ultra book

Is it...

Ummm, what is it please?

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Anonymous Coward

Re: Is it

It's a lump of dogshit that won't sell.

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Anonymous Coward

Business

If business is what it is aimed at they're not going to spend an extra £100 on a pretty pink cover, if it's a personal use tablet who on earth will pay £600 (remember how Microsoft use the exchange rate of $1=£1 in the UK they just add a bit more and round it up to the nearest £100) and then have to add extras.

They will almost inevitably lose out to Apple.

However, just after Christmas they will be discounted as an end of line product, get one then.

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Anonymous Coward

Re: Come on MS

When do other companies get to show us their versions?

Like ASUS?

ASUS' alleged Win8 roadmap

Hands on video of the ASUS Vivo Tab RT

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Coat

Re: Is it

It's a floor wax...

It's a desert topping...

It's....

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Re: Business

Not sure where you got the extra £100 for a pink keyboard. The standard one is black. To get colour it will cost you £19.99 more to get one of the brightly coloured ones. Still not good, but not the £100 you reference. Possibly you are comparing the cost of the version where you specifiy you don't want a keyboard and counting the reduction and then adding in the cost for a pink one.

Also, whilst as per usual we Brits get ripped off, note that in the USA they don't print the Sales Tax in these prices so you can add about 20% to the US dollar list price you see which makes it not as bad. As the article points out, price of SurfaceRT with black keyboard is the same price as an iPad3 without any additions (comparing 32GB models). For 64GB versions, the prices are again the same though I'm not sure why you'd need the 64GB Surface as much as it comes with micro-SDXC and USB functionality so it's easy to bolt in extra space. On the other hand, the iPad3 takes a SIM card which the Surface doesn't.

Am disappointed I have to wait for the Pro version to get proper stylus support.

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Silver badge

Re: Business

A 10 second Google shows your wrong on the UK pricing: http://www.microsoftstore.com/store/msuk/en_GB/pdp/productID.257929400?WT.mc_id=FY13WinHH

They may "lose out" to Apple, but so what? Apple lose out to Samsung and Nokia on phones; they lose to Google on mobile OS, and MS on non-mobile OS. That doesn't mean they can't sell something. Sadly anything Android loses out to Apple on non-phone tablets, but I don't see that as a reason not to like Android tablets.

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Anonymous Coward

Re: Business

"They may "lose out" to Apple, but so what? Apple lose out to Samsung and Nokia on phones; they lose to Google on mobile OS, and MS on non-mobile OS." Other that taking the lions share of the market place profits, yes the do..

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Re: Business

<<Not sure where you got the extra £100 for a pink keyboard>>

$499 w/o keyboard. $599 with. Seems straight forward to me.

I want this device to succeed but the pricing is disappointing. Everyone would like to pay less but this seems like Windows Phone all over again. Back then MS released Windows Phone at the same price as the iPhone. Maybe there were other reasons for the disappointment of Windows Phone but part of it was surely the ridiculous price.

Here we are again. Instead of making a headway into a market MS seems to be pitching itself along side the incumbent. I've heard Balmer say they don't want to compete down market. But the risk is they will compete in no market and probably be in the worse position of having to reduce price to shift product. Then the news will be about another MS failure much like the example at HP.

IMO Microsoft isn't a retailer and it doesn't get retail. It seems to me the people it needs to attract to help will be working more fertile opportunities leaving them with the also-rans, people who will be unable to challenge the dominant wholesale culture in Microsoft.

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Silver badge

Re: Business

"$499 w/o keyboard. $599 with. Seems straight forward to me."

Ah, you're just de-selecting the keyboard and then re-adding it and saying it's a £100 for the pink keyboard. It sounded like you were saying it was £100 more for colour. Standard cost of £479 with keyboard. £498 with coloured keyboard. If you remove the keyboard and just order the tablet part, then it's £399. But I don't imagine many people will do that. It turns it into a cheaper iPad a bit if you don't get the keyboard.

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Re: Business

Uh...sales tax in California is 8.5%. In Nevada sales tax is 0%. Not sure where you get the idea sales tax is 20%

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Unhappy

Re: Business

Sir, you are wrong, there is no "pretty pink" cover but there is a Magenta one. Do I want to "express my personal style" with a Magenta cover??! ...or should it be a Cyan one? Red maybe... Black or White? I really want it in Brown but there aren't any. I miss my... hummm... was it a Zune or a Dune? :(

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The keyboard is not a touch-typing friendly affair

It doesn't have real keys, its a "foil" keyboard! I remember trying some of those - awful.

Microsoft states its x percent better to type on than an onscreen keyboard...

That should tell you something...

Better off to buy a Crapple tablet and get a good bluetooth keyboard from Logitech or Genius, or any number of cheap Asian keyboard jobs.

I hate Apple's locked down systems, and the fact that Microsoft wants to be exactly like Apple now is terrible for users who liked to have control over how they use things they bought.

Think of Apple's new Lightning connector - there's a chip in the cable - not for the user's security, but just to prevent you from being able to use peripherals not authorized by Crapple.

If you buy gear like that, you're voting with your wallet to have all of us put in a technological straight jacket. One day, "The PC is dead" will stand for a big change of Megacorporations completely taking control away from us over the gear we buy.

The new "Computers" will not allow us a choice of what OS to install on it, like smartphones today. You're stuck till the Manufacturer decides your 1 year old device is still worth bothering with an upgrade. If they decide its not worth their effort, cause they'd much rather give you an artificial reasons to buy brand new gear, you can't just buy another OS or download Linux. Because no driver/firmware specs are published, everything is proprietary and locked down with stinky little custom connectors, copyrighted and patented, even though they do nothing that a standard USB plug wouldn't do as well.

You think the new secure-boot technologies are just to prevent thieves and viruses? think again. You'll be tracked and you won't be able to boot what you like.

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Nevada 0%

Did you only shop at the Grocery Store on your visit? Try 8% for greater Vegas Area

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Whoa! 20% Sales Tax? Who pays that?

Sales Tax is around 6% to 9% in the US, depending on where exactly one lives.

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Angel

Re: Whoa! 20% Sales Tax? Who pays that?

Everyone in the UK, numpty.

The poster was comparing like-for-like w.r.t. US and UK pricing.

There may be duty too (?).

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Flame

Re: Come on MS

So...

Apple is now the '90s Microsoft, pulling everyone into their walled garden.

Microsoft is now the '90s IBM (ie: OS/2), coming up with interesting innovations but hamstringing them before they're even out the gate.

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Linux

Re: Business

I would, except that Microsoft encrypts the bootloader. If I can't load Linux or another open OS, why would I buy a failed product? The HP tablets didn't sell like hotcakes because of webOS, but because hackers could load other operating systems such as Android or Ubuntu, and heavily tailor the machine to their preferences. THAT's the real value in the scenario you suggest - but also one that Microsoft is trying their best to prevent!

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Unhappy

Re: Whoa! 20% Sales Tax? Who pays that?

All European Union countries must charge VAT (Value Added Tax) on all purchases of this type of equipment. Rules are complicated and the rate varies from country to country. For example:

Liechtenstein - 8%

Luxembourg - 15%

United Kingdom (where I live) - 20%

Republic of Ireland - 23%

Hungary - 27%

In the United Kingdom any duty is added before VAT is applied.

It's horrible!!!

But remember for our visitors outside of the EU, you can claim some to all of that back!

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Facepalm

Re: Business

sales tax = 0% here in Oregon, too.

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FAIL

They should've subsidized hardware in the beginning (like Amazon and Xbox - a game console made by some company). Idiots. As is it's TouchPad all over again. Well bring it on then. I'll snap my up in February when the price falls to $200.

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Anonymous Coward

Tough spot to play in

Subsidizing the hardware would risk pissing off the OEMs even more than they already are - especially given that they will be charged (according to the rumors*) $50-60 for the RT software license.

Damned if you do... damned if you don't.

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Re: Tough spot to play in

Well, then. You can't have it both ways and make a boatload on the OS and on the hardware. If they set up an introductory period, where OEMs would get OS at a steep discount and collaborated on the specs, so that OEMs can produce premium models while Microsoft produces the base one, I'm sure OEMs would've gotten on-board.

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Silver badge

Re: Tough spot to play in

I don't think MS actually want to make the Surface a major part of their business model. I genuinely think that they are using it mainly to make a really good impression with Win8 and to beat the OEMs into raising their game. The pricing and the amount they are rumoured to have ordered made, plus Ballmer's statements about just wanting to sell a few million, support this.

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Silver badge

subsidized ?

> They should've subsidized hardware in the beginning

That would really have made the OEMs get out there and support Windows 8/RT. They would really want to help Microsoft by having to compete on price at a loss _and_ send $70-90 to them for every tablet they lose money on.

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Windows

@h4rm0ny "...using it mainly to make a......

........really good impression with Win8 and to beat the OEMs into raising their game."

Indeed, MS made it very clear that they were not going to play cut-throat with the OEMs and that they were looking to "bench-mark" the market at the mid-end with their Surface RT model and at the upper end with the Surface Pro version. As you point out Ballmer said explicitly that they had modest plans with regard to production and sale. People are surprised at these price-points? They are absolutely and predictably in line with Ballmer's remarks about price-point "sweet spots" in his most recent public interview - competitive but not "Tesco" pricing. Redmond are doing, currently, exactly what they said they were going to do. What the future may hold if a significant proportion of the OEMs continue to punt out overpriced, under-specced pisstakes is another matter. However, in those circumstances they would have nobody to blame but themselves if MS then responded by going in for expanded production in the medium term.

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Silver badge

Re: @h4rm0ny "...using it mainly to make a......

Ballmer did publically state that they were keeping their options open whether they'd decide to do more Surface devices, but it's no good hitting someone with a stick if they think you can't do it a second time. His comment was exactly the sort of thing that fits with just using the Surface as a pace-setter. Those people who are talking about this being priced to fail (click-bait headline, I'm looking at you), or worse, those who expected it to be much cheaper despite no evidence and statements from MS to the contrary, I'm filing alongside those "analysts" who predicted wildly over the top sales figures for the iPhone5 on its release and then announced it had failed expectations when it "only" sold 5million in the first few days. If it "failed expectations", maybe you just got it wrong with your analysis. Same here. It's priced alongside the iPad as it was always said by MS that it would be.

What's interesting is that they have priced it exactly to the iPad. They clearly think two things - one, that the snap-on keyboard, better connectivity and OS trump the iPad's better screen and SIM-card slot and OS. I'd like the screen of the iPad3, but I don't need it. Plus the Surface aspect is better for widescreen media. For me *personally*, the SurfaceRT is better. So MS have got it right for a lot of people (I'm not statistically going to be the only person with these priorities).

But the second thing MS have done is pretty great tactical maneuvering. Apple are certainly not going to raise their prices - they already are targetting the upper end of the market and presumably have priced at what that demographic will bare. So if they want to adjust pricing, say perhaps because they need to due to increasing competition from MS and Android, because they want to rearrange their pricing lineup with a new mini-iPad or even just to reflect the state of the economy, the only way is down. What do people think if a rival brings out something for the same price as your device and you lower your prices? Yes - they think your product is inferior. Apple make good quality hardware but they charge you more for it. They can get away with the "Apple Tax" because they are seen as the superior product by those who buy them. This image of being the brand for the elite is one of the most valuable assets Apple has. If they lose it - they'll take a disproportionate hit to their sales because unlike PCs, image is a part of Apple's appeal. Justifiable so far because Apple do make good hardware (I'm just not an OSX or iOS fan). But if that image slips - it will hurt them.

By nailing their prices to Apple in such a brazen in-your-face way, MS are really giving Apple nowhere to adjust their pricing, which is a bad thing when you're trying to fine-tune sales. It's also the loudest possible shout of "Bring it on" that MS could make short of doing a series of "I'm an iPad, I'm a Surface" style adds. (Which would admittedly be pretty funny).

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"They should've subsidized hardware in the beginning"

Not if they wanted Asus et al to make tablets too. Its a different proposition when you aren't the only supplier.

They must be pinning their hopes on Office snaring business customers wanting to get work done. iPads are great for many things, but editing office documents isn't one of them.

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Re: @h4rm0ny "...using it mainly to make a......

@h4rm0ny good point about the link to iPad pricing making it tougher for Apple on iPad pricing and new model introduction strategy next year.

Furthermore looking to 2013, there are a few obvious improvements to Surface RT to make for a new premium model using the same overall chassis and design. 1080p and Tegra 4 I think we can take as a given, possibly some other incremental improvements such as a cool rear facing camera, USB 3.0, LTE module, though thats all be speculative. At that point a relaunch of the entry level model at a lower price point would follow the approach Microsoft have taken with Xbox. It is also more than likely that Xbox Next will launch before next years holiday season, a factor we shouldn't regard as totally independent of other Microsoft initiatives in the consumer space Windows, Surface and phone. What actually pans out will depend a lot I suspect on whether OEMs such as HP and Dell embrace Windows RT over next 3-4 months, the final decision of whether to go ahead on Surface 2 manufacturing can probably wait until February or so.

Taken in this context, price points seem to make sense to me in the short term as part of a longer term thought out Microsoft strategy.

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Bronze badge
Stop

Damned if you do... damned if you don't.

... and then, of course, there are those who damn it just because it's Microsoft.

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Thumb Up

@h4rm0ny Re: "I'm an iPad, I'm a Surface" style adds."

Indeed, and if they could work in a few remarks about coffee bars I am sure that many (albeit not all ;)) would be highly entertained.

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Thumb Up

@qwarty Re: "looking to 2013"

That makes a lot of sense. By the same token one could anticipate a "Surface Pro II" towards the end of next year with Haswell chippery and possibly the upcoming lower power usage RAM chips which should be available during the course of the back half of next year.

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Anonymous Coward

Downvoted for writing "at the mid-end"

That is all.

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"There's also the Ultrabook market to consider. Intel is trying to get Ultrabooks down to the $699 price point, and faced with the choice between a slim laptop that can run full Windows 8 and Office 2013 or a tablet running cut-down versions, consumers could be expected to go with the more versatile Ultrabook rather than a Surface fondleslab."

It's there now. Newegg has the ASUS Zenbook UX32A-DB31 Ultrabook for $699, plus they throw in a $100 Newegg giftcard.

Priced to fail indeed!

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This post has been deleted by its author

SSD?

An ultrabook WITHOUT an SSD is not and ultrabook in my opinion.

What makes a MacBook Air so compelling is the standard SSD.

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Happy

Re: SSD?

So take your $100 NewEgg gift card and buy an SSD

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Re: SSD?

It's a hybrid drive and you can install the OS on just the SSD portion. I think the SSD part is 32gb, but not sure.

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Re: SSD?

Ok, I found out.. 320GB (With 24GB SSD reserved for Instant On)

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Silver badge

Re: SSD?

Says who? Ultrabook is a trademark, it's an Ultrabook if Intel say it is. I might as well say a MacAirPowerBook isn't a Mac because of such and such thing that I don't like.

You don't get a MacAirBook (sorry, I don't speak Apple) for that price anyway - and there are plenty of other laptops that do have SSDs (whether it's "standard" or not is beside the point - if it's optional, I can still choose to have it. Forcing the choice on me doesn't make it more compelling).

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Silver badge

Re: SSD?

If memory serves, says who is says Intel. Their original spec for the ultrabook mandated SSD alongside the $699 price-point (and a few other bits). Which is of course why their sales have taken off and soared like your average power-brick does.

But as you say it's an Intel trademark, so they can presumably change it to suit their own needs and maybe even suit actual reality of current BOM costs that OEMs might actually have to charge for the thing rather than their fantasy price-point, if they don't want to lose cash on each.

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Anonymous Coward

Re: SSD?

The original spec could be, and was gamed within the rules... not by breaking them.

http://arstechnica.com/gadgets/2012/01/ultra-in-name-only-the-failures-of-intels-ultrabook-rules/

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Anonymous Coward

And all Apple has to do ?

Knock $100 off the ipad and this will kill the surface dead. Apple can easily afford to do this and still make plenty of profit.

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Mushroom

All Apple has to do?

"Apple can easily afford to do this..."

I think you mean 'are going to do this next week'.

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Silver badge

Re: And all Apple has to do ?

Unless they foolishly introduce an iPad Mini in the tiny gap between iPod Touch and iPad, of course. Then they've no real flexibility to drop the price of one thing without having to drop the price of the whole lot. If it's take a hit across the range from the lowest iPod up or wait and expect that Microsoft fails on its own merits I think it's likely they'll try the latter.

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Anonymous Coward

Re: And all Apple has to do ?

Do they even have to do this? they're the market leader and the iPad has a much higher resolution screen, proven track record and loads of apps.

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Re: And all Apple has to do ?

Its easy for Apple. Launch iPad Mini, discontinue iPad 2, lower the price of the New iPad to the now defunct iPad 2 level. And bosh, even the strangely named new iPad makes sense; iPad and iPad mini.

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Silver badge

Re: And all Apple has to do ?

By that logic, all MS has to do is knock $100 off and it will kill the ipad dead. MS can change the price in future just like Apple can.

Although it's pretty basic business logic for companies in oligopolies to not engage in price wars if they can avoid it, because it just harms them both.

Not to mention that historically Apple are never able to make cheap products, instead they have to charge loads for them, preferring to make money selling overpriced products to a niche. Fans have been claiming for years how a mythical better priced iphone would "kill Android dead", but you know what? I'm still waiting.

Apple can only afford to do so in the sense of burning lots of cash, but why would they throw away their ability to make any money, when it's the reason companies exist in the first place, just so that a few Apple fans can finally brag about their OS not being runner up in the market?

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