Microsoft's Surface RT pricing 'aggressive,' 'mystifying,' say analysts

Computerworld - Microsoft's pricing of its Surface RT tablet was called "aggressive" by some analysts today, "mystifying" by others, even as they all remained skeptical that it's low enough to make inroads on the dominant player, Apple's iPad.

"It's an aggressive price, especially compared to the prices of the RT devices from their OEM partners," said Tom Mainelli of IDC. "[But] I'm not sure it's aggressive enough, when you consider that one of the big draws of Surface is that slick keyboard and it's going to cost an extra $100 or more."

"This is aggressive and right where it needs to be priced," echoed Patrick Moorhead, principal analyst at Moor Insights & Strategy.

Earlier today, Microsoft began taking pre-orders for the Surface with Windows RT tablet (Surface RT), with prices starting at $499 for a 10.6-in. display and 32GB of storage. The entry-level model omits the Touch Cover, a cover-cum-keyboard that Microsoft has heavily promoted in the months since it unveiled its first-ever home-grown tablet.

The Surface RT also comes in a $599 configuration that includes 32GB and a Touch Cover, and in a 64GB model with a cover for $699. Touch Covers will be available separately for $119.99, and the Type Cover, a slightly thicker keyboard with key travel more like that of a lightweight notebook, will be priced at $129.99.

Other analysts questioned those prices.

"I was hoping for $399," said Carolina Milanesi, an analyst with Gartner, in an interview today. "They believe the Office suite is enough to justify that premium [of $499 and up], but they're late to the party. From the consumer standpoint, Office is not what will make you get a Surface RT."

The suite Milanesi referenced was Office Home and Student 2013 RT Preview, a four-app bundle of touch-enabled Word, Excel, PowerPoint and OneNote written for the "Modern" -- formerly "Metro" -- user interface (UI) on Windows RT.

Microsoft is including Office 2013 RT with all Windows RT-powered tablets and devices, its own Surface as well as ones designed and sold by its computer-making partners.

"But enterprises looking at Windows [on a tablet] will pick the x86 version, Windows 8, not Windows RT," Milanesi continued. "For enterprises, Office would be an advantage. Not for consumers."

Ezra Gottheil, an analyst with Technology Business Research who tracks mobile devices, including the Surface and Apple's iPad, was much more pessimistic about the Surface RT at today's prices.

"I can't figure this product out at all," said Gottheil. "I don't know what kind of impact Microsoft thinks it will have, but its only hope was to very aggressively priced."

And at $499 and up, the Surface RT didn't meet his definition of "aggressive." That would have required significantly smaller numbers of $350 or so.

"It just doesn't make a lot of sense. You can get a very good portable PC at these prices," said Gottheil. "Where it stands, it's hopeless."

The elephant in the room was Apple's iPad, the benchmark tablet for most experts and consumers. Apple sells the iPad at $499 for a 16GB model, $599 for 32GB and $699 for 64GB, all minus covers or keyboards. It also still offers a 16GB iPad 2, a 2011 model, for $399.