Neil Hughes
Shaw Wu with Sterne Agee said in a note to investors on Tuesday that Microsoft will need to price its ARM-based Surface close to, or even below, Amazon's $199 Kindle Fire. The risk would be Microsoft taking a loss on the hardware, as Research in Motion has done with the PlayBook and HP did to sell off TouchPad inventory.
Separately, Brian White with Topeka Capital Markets also believes Surface "will need a healthy price discount to the iPad" if Microsoft hopes to gain traction. He said Microsoft will likely have a difficult time undercutting the iPad, since Apple's iPad 2 is priced at just $399.
In addition, White also believes that Apple could release a smaller, so-called "iPad mini" this September at a price point between $250 and $300. That would make it even more difficult for competitors like Microsoft to undercut Apple, and would also open up the iPad to a new market segment.
Wu noted that Microsoft's press conference, held in Hollywood on Monday, was very Apple-like in its presentation. He sees it as a positive that Microsoft is being more proactive in addressing the mobile device market where it has had little traction, but also noted the Surface will cannibalize Windows partners like Dell, HP, Acer, and Lenovo.
Industry sources who spoke with Wu indicated that one of the reasons Microsoft has decided to take more control and produce its own hardware is the lackluster results Nokia has had selling devices based on the Windows Phone platform.
"Despite heavy promotion and advertising and carrier desire to have a viable alternative to Android and iOS, Windows Phone 7 has found disappointing customer acceptance," Wu wrote.
To White, Monday's event was a clear sign that Microsoft is looking to find its identity in the post-PC era. He said that Microsoft's decision to control both hardware and software in creating the Surface was "the sincerest form of flattery to Apple."
In White's view, the ARM-based Surface tablet will be more of a threat to the Android ecosystem than Apple's iPad. And he thinks the Windows 8 Pro Surface tablets, featuring Intel processors, could have a place in "certain parts of the enterprise world." But he said Monday's presentation gave him no reason to think most consumers would prefer Surface over an iPad.
Wesley Hilliard
AppleInsider Staff
Christine McKee
Andrew O'Hara
William Gallagher
128 Comments
Microsoft themselves quoted this as being 'around about ultra book' pricing levels. That's one damn expensive tablet.
I noticed that, although Microsoft tried to make the keynote 'Apple-like' the thing was very poorly done. The Surface shitting itself in the first few minutes of the demonstration didn't impress many either.
I did like some of the ideas they've implemented, and kudos to them for not doing an outright Samsung, but it may not be enough.
Time will tell.
An inconvenient tablet.
An inconvenient laptop.
It runs Windows.
Remember the re-branded Toshiba Gigabeat MS called the Zune?
This is a re-branded Acer Iconia. It's been done before. Consumers didn't really go crazy over the idea. This thing will be dead and buried in two years.
MS had a chance, like everyone else, to change the game completely. As with Windows Phone, they didn't. It's just . . . adequate. Which is hardly enough in this market.
You can make it dirt cheap. MS still won't be able to move enough of these things to make the effort worth it.
Most people will want to take a look, at least. I think there's no chance in h377 the Surface (aka serve-us) will sell for $199. --that's instinct, not industry knowledge. My guess would be $399 for the ARM and $699 start for the Pro. Microsoft doing hardware and software? I'm thinking that's hard to suddenly jump into. I'm not at all convinced this can be a home run. Something somewhere will be a screwup. Even if it's behind the scenes meaning they lose even more on the products than expected. But as a competitor I think this is a decent showing. It's not an iPad because iPad will destroy any wanna-be iPad. It's something different. It's thicker, hardware keyboard, sd card slot and USB. It has the kickstand and a new OS that is built for a different take on touch (inline android, which is the same take on a touch OS.). So this is good. It's a real fight (or will be when it actually ships). Whether Surface has much of a chance in the near term is highly questionable. But didn't they with Xbox buy their way in until they had learned lessons and gained traction? When you've got that much money and that much need, this is the best way to go for them.
This will be fun to watch. If MS are licensing WinRT to OEMs for $90 and pricing the Surface at $200 the magic question is how much did RIM's value just go up to the Dells and Lenovos of the world? Will HP be smart enough to have made real progress on WebOS behind closed doors? There is nothing wrong with disruption, but if HP wasn't as ineffective as they have proven themselves to be time after time, I would expect a fantastic new office suite, messaging suite, and hardware-integrated servers to start being heavily marketed. I'm not sure Microsoft can keep the dominance this time around. The writing is on the walls for their partners...
Its going to be like a box of chocolates...pretty on the outside but once you start to bite into the chocolate you realize it tastes like shit!