Microsoft’s iPad Rival Surface Tablet to Launch in Oct. at $199

| Rumor

Microsoft Surface Tablet

Microsoft’s Surface tablet was announced to significant fanfare (“significant,” at least, relative to other Microsoft consumer product launches) in June. Many pundits and early reviewers were impressed with the product’s design and software implementation of the new touch-focused Windows 8. Others weren’t so impressed. Everyone, however, was curious about one thing: the price.

Theories on price ranged from around $500 all the way to $1000. While Microsoft still has yet to announce the official price, Engadget reports that the Redmond company is getting ready to launch the ARM-based Surface tablet on October 26 for a surprisingly low price of $199.

At a sub-$200 price, the Surface would line up very well with Android-based tablets that currently hover around the $200 mark while providing, some would argue, far more functionality from a software perspective (too much about the Surface’s hardware remains unknown, but we provide a spec comparison on what’s know thus far).

Such a low price, if true, means that Microsoft will take a significant loss on each device, something that may be necessary to try and catch up to Apple and something that the company has done before to great success with its Xbox 360 console.

The alleged $199 price point may be good news for interested consumers, but Microsoft needs to consider a factor that competitors like Apple do not: hardware partnerships. 

Windows 8 RT, the ARM-based version of the next generation operating system, will be primarily sold on devices from third party hardware manufacturers like Acer, Asus, Dell, Lenovo, and Samsung. While Microsoft may be willing to take significant losses on the hardware in order to push the platform, its hardware partners cannot follow suit. If a $199 Surface becomes the best option for a Windows RT tablet, Microsoft risks losing the participation of its partners not only in the RT space, but in the Windows ecosystem as a whole.

Microsoft’s pricing strategy may also impact Apple, as the Cupertino company may feel pressure to not be significantly higher in price on the rumored iPad mini than another full function tablet from such a long-time rival.

We expect Microsoft’s RT version of the Surface tablet to be out this year, as early as late October if Engadget’s source is correct, with the x86-based Surface Pro launching at a higher price in early 2013. Apple’s iPad mini launch details are unknown, with some rumors pegging it as early as September and other suggesting a 2013 launch.

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21 Comments Leave Your Own

paikinho

Wow…. for $199, if it was functional, it would be a hit for people looking for a versatile netbook replacement.

Bryan

Shocking a writer for a site called “The Mac Observer” would give a Microsoft product a bad review. You are completely brainwashed by crapple’s slick marketing, hope it feels good to pay 3x as much for devices that are no different than their counterparts.

Jim Tanous

Shocking a writer for a site called ?The Mac Observer? would give a Microsoft product a bad review.

Thanks for the feedback, Bryan. However, I wasn’t aware that I gave the product a review at all, considering that I don’t have a production model in hand.

I’m excited for the Surface and Windows Phone 8 and hope that they succeed. Microsoft’s success will only push Apple, and the entire market, forward. We’ll do our best to have a full review of the Surface as soon as Microsoft lets us get one. Feel free to comment on our alleged bias at that time.

Have a great day!

paikinho

Bryan:
Is this a bad review? Seems to be stating where the product stands currently and that it will force Apple to respond.
Or are you referring to another article?

I guess noting that the pricing seems very aggressive and Microsoft OEM’s may have difficulty with the pricing point could be a negative, but such is the nature of selling anything below the device costs. That is more an economic reality than a negative statement about any aspect of the actual device or its capabilities.

msbpodcast

Why does the hardware production world think that the layout in offices will change overnight?

It hasn’t changed since the days of Charles Dicken’s.

Bosses need to keep an eye on their employees.

Bosses need to keep their information secure and private.

This class of machines is a solution looking for a problem that doesn’t exist.

tampaappleman

hope it feels good to pay 3x as much for devices that are no different than their counterparts.

brian, did you ever own one of the “crapple"products? Why are you carrying you so much hate for their products? You really make a fool out of yourself if you say that Apple products are no different than their counterparts. Ever compared a Zune to an iPod? Have you ever had a Zune in your hands and noticed what a crap product it is/was? You can’t be serious and must live under a bunch of rocks.

jfbiii

Microsoft risks losing the participation of its partners not only in the RT space, but in the Windows ecosystem as a whole.

I don’t see that happening. In the mobile/portable space, maybe. There, Android is a real alternative. But in desktop/laptop operating systems there really are no viable alternatives. For all the complaints about iOS not being a content creation platform, how much farther behind is Android in that respect? OS X is off limits, Linux is unsuitable for the vast majority of end-users…all that’s left is Windows.

paikinho

I think of this class of machines as sucking up the market for students and young people first. People may not want to spend money on a bigger weightier more robust machine that someone would want for a business.

Parents would get these for their kids though. Young people and people without much money would get one of these because of it being like a netbook, but perhaps better and more functional for their needs.
But that is speculation on my part.

MOSiX Man

I’ll believe that price (maybe) when I see it written in an official press release from Microsoft. At this price, it seems that Microsoft would likely be making back somewhere in the ballpark of 2/3 what it costs to make the Surface. I know that they have pulled off something similar vis-a-vis the XBox/360 vs. the Playstation II/III. However, I don’t think that the XBox had anywhere near as much of a catching up to do with the Playstation, as the Surface has to do with the iPad. Also, in the gaming console world, the big profits are made on games sold, not on the console, themselves. If the surface struggles to gain much marketshare, there is no tag-along revenue stream to make up for money lost selling each unit.

I think that, if this price is accurate, the the Surface will actually sell in more significant numbers than if MS were to sell it at any price that provides them with a profit margin. However, I still think that the Surface will always tail the iPad, from a good distance, sales and marketshare-wise. Will it ‘fail’? No. MS can afford to push it, refine it, tweak it, etc., until it sells well, but I think it will actually take more away, eventually, from the Windows laptop market, than it will from the iPad. That’s sticky to figure out, though, because the iPad is likely taking away from the Windows laptop market, already.

geoduck

Anyone that calls the company ‘crapple’ and drags out the old, tired, long ago debunked ‘3x as much’ meme is a troll.
Please don’t feed the troll.

I see this as a compelling device at this price, but it would put a nail in the netbook’s coffin. I don’t see it being as big a deal in the tablet market. It strikes me as more of an ultra-ultra lightweight notebook than a tablet.

der passant

That was a quick race to bottom, if the price is true.  How are third party manufacturers going to enter the market?

Magn8

There’s a lot of speculation (and that is all it is until we start seeing verifiable BOM’s published/leaked) about the direct costs of the Surface, and therefore what Microsoft’s relative and actual margins on the product will be.  Margins on existing tablets are modest at best, which is why the present players who have the largest device sales are the ones who control a content ecosystem for the devices that users pay to consume from (shocker).  With Microsoft’s heavy push to lure developers into Windows 8 app development, I could see a potential residual revenue opportunity a la iTunes or Amazon if they can get the support of their developer community to make compelling and competent applications for the platform.  Apple and Android developers aren’t beneath producing crapplications, mind you - some shockingly large percentage of applications in the Apple App Store and in the Android Market are never purchased or even downloaded, and probably for good reason. 

@msbpodcast - Seriously?  Office layouts have nothing to do with the consumerization trend.  Many Fortune 500’s are realizing that the opex and capex of real estate is becoming less necessary with the way technology has changed the corporate workstyle.  Consumerization is pushing this even further.  Many companies are moving away from traditional cube/office workspaces and adopting their environments to allow for more teleworking/remote workers, or flex workstyles.  I haven’t reported to a physical office or had a Bill Lumbergh style boss who physically checked up on what we were doing in the last 5 years.  That’s not that uncommon.  I also don’t think the tablet (or any other device) is being touted as an information privacy solution.  Heck, if that’s your argument, my corporate laptop is just as insecure, and 75% of the 40,000 PC’s at my company are laptops.  Form factor does not equate to data protection in any way.  Companies protect their corporate data through infrastructure, not by relying on a particular type of endpoint.  If they are, they’re doing it wrong and I can guarantee have been breached already.

The Surface is evidence that Microsoft is finally being bold enough and humble enough to realize they need to be more agile, more innovative, and more relevant in the way computing is changing for both consumers and in the enterprise.

Lwio

The xbox has not been such a success as many think. Many people have said that the xbox has actually lost a great deal of money.
To launch a device at a loss is in my view never going to be a success.

Magn8

The xbox has not been such a success as many think. Many people have said that the xbox has actually lost a great deal of money.

Really?  In Q4 of last year, XBOX revenues for Microsoft grew by 14% and are positioned (depending on how Win8 is adopted) to be a larger profit center for Microsoft that its Windows division.  Why?  It sure ain’t because they’re selling consoles.  It’s because they got smart and are capturing recurring revenue from subscriptions to XBOX Live, in addition to software revenue from game companies and advertisers.  Microsoft cares less about the actual console than it does about its potential to generate revenue from Kinect (think about it - they bought Skype - where do you think that would benefit them outside Lync?) technologies and from recurring revenue from its ever-increasing positioning as a social platform for gaming.  It’s a huge potential cash cow.  Sure, this year, XBOX profits were not as great to date, but the console hardware is pending a major platform overhaul with the next version, and holiday sales are the typical rainmaker for these consumer devices.  Subsidizing the consoles at $99 with a 2-year commitment to XBOX Live isn’t going to hurt either…

Lwio

Lwio said:

The xbox has not been such a success as many think. Many people have said that the xbox has actually lost a great deal of money.

Really??

Yea I was surprised too:

http://www.dailyfinance.com/2012/07/15/how-one-of-microsofts-greatest-consumer-successes-/

geoduck

Of course, given their track record of the last decade there is a not insignificant possibility that Microsoft will introduce the Surface and then cancel it as a “failure” after 60 to 90 days.
LOL

xip

Whether or not XBox is a financial success it is a “sales” success in that people are buying it and it’s games in large numbers.

HOWEVER, one of the ways they have done that is to have killer proprietary games, i.e. Halo.  How they would do that in todays tablet app market, I can’t really see, as there are very few proprietary apps on just iOS or just Android, let alone killer apps.

other side

At $199 and a hefty loss with each sale, why doesn’t MS just give them away?

A free Surface with each Windows/Office workstation license.  Enterprise and education would love this.

Jamie

For what it’s worth, the X-Box division is profitable at this point, but it spent a decade losing money, that’s a fairly recent development.

It’s always been the Microsoft way, they do have tremendous reserves to fall back on and have seldom ever attained profitable longevity except by throwing good money after bad. I’m not entirely certain they can make that work for another decade with another unprofitable product/ecosystem when the ground beneath their feet is shifting so rapidly, though, and I’m not convinced the Surface Jr. is going to make much of a difference. I am however in agreement that Apple needs the genuine competition (i.e. genuine innovation by others rather than Apple copycat-ing) - I guess we’ll see what happens. I’d love it if someone made something that was truly cool and tempting to me, but thus far Google and Microsoft have just fallen flat.

mrmwebmax

+

That was a quick race to bottom, if the price is true.? How are third party manufacturers going to enter the market?

A very good point, and one that analysts seem to agree upon. From CNET:

“We’d be astonished to see a $199 price point,” said Rhoda Alexander, director of tablet and monitor research for IHS. “It would be giving away money and losing money at the same time.”

Roger Kay, principal analyst at Endpoint Technologies, also has serious reservations. “If Microsoft decided to go for the jugular and do the loss-leader to sell software, it would really screw with the Microsoft partners,” he said.

Kay continued. “There are already a lot of efforts underway and money has been spent [by partners] on getting products to come to market with Windows 8. If they mess with their partners like that they may lose them entirely,” he added.

Full article here:
Analysts wary of Microsoft tablet “fire sale”

iJack

The rumor was started by Apple.

They know that MS can’t sell Surface for $199, and when MS announces the real price, disappointed consumers will turn away in droves.

wink

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