Microsoft's Surface 2 and Surface Pro 2: Too-high prices mean they're non-starters

Microsoft's Surface 2 and Surface Pro 2 have gotten some nice hardware refreshes, but they're still priced too high -- so high that it's unlikely they'll seriously compete against the iPad or Android tablets. Think of them as Ballmer's last stand.

The RT-based Surface 2 sports a faster processor than its predecessor, a Tegra 4 1.7 gigahertz quad-core ARM chip which Microsoft says is 60% faster than the Surface RT's processor. The screen has been improved as well, a 10.6 inch 1080p display with a pixel count of 1920×1080. There's a USB 3.0 port, Bluetooth 4 support, Dolby Digital sound, a 3.5 megapixel front-facing camera, and a 5 megapixel rear-facing camera. There's a better kickstand as well, which Microsoft says is better for using it more like a traditional laptop as well as using it on your lap. Microsoft also claims 10 hours of battery life for "active use," which it says is 25% better than the original Surface RT.

That's all very nice, but not especially groundbreaking. But here's the bad news -- the price. It starts at $449 and goes up from there. That's the same price as  the newest iPad at Wal-Mart. At that price, don't expect that many takers. It's certainly not going to compete with iPads or low-cost Android tablets.

Gartner analyst Carolina Milanesi told the New York Times:

"I think it's tough to come in at that price point when you are not that differentiated."

She's right. It's certainly not going to compete with iPads or low-cost Android tablets. Will Microsoft face the same problem as it did with the original Surface RT --- having to write down $900 million in unsold inventory? Likely not. But that's because it probably learned from that lesson and won't manufacture nearly as many as it did the first time around.

The Surface Pro 2 comes with a speedy Intel Core i5 Haswell chip running at 1.6 gigahertz, which Microsoft says translates into about 20% faster than the original Surface Pro. As for graphics performance, Microsoft claims a 50% boost. It also has Dolby sound and a 1080p display with a pixel count of 1920×1080. Its storage capacity ranges from From 64 gigabytes to 512 gigabytes. That's all very nice. But once again, there's a problem with the price -- $899 and up: You can get some very powerful ultrabooks for that price. And for much less than that you can get iPads and Android tablets.

Because of that, I don't expect Surface Pro 2 sales to be spectacular. Microsoft may well market the device as a notebook rather than a tablet. But if so, what's the point of making it a tablet? Why not just sell an ultrabook with more power for the same price or even less?

In a way, the Surface 2 and Surface Pro 2 are Ballmer's last stand. They're nice enough hardware but priced far too high. They're designed for a world in which Microsoft believes you only need to slap Windows onto a device and people will want to buy it. We see where that has led. For a real look at Microsoft's future, we'll have to wait for the Surface 3 and Surface Pro 3...if there are any.

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