Customers blast Amazon for Surface RT price gouging

Computerworld - Amid speculation that Microsoft will soon expand distribution of its Surface RT, giant e-tailer Amazon continues to offer the tablet through partners, who jack up the price or post inflated list prices to claim large savings.

Talk of broader distribution for the Surface RT, which by some accounts has struggled to sell in large numbers, started last week when long-time Windows blogger Paul Thurrott hinted that the move would come "within days."

But Amazon has had Microsoft's Surface RT on its website for weeks. Independent resellers, not Amazon itself, offer the tablet. They presumably buy tablets at a Microsoft retail store or from the Redmond Wash. company's online store, then turn around and resell the devices on the massive site.

Today, searches on Amazon for the Surface found several resellers with the tablet in stock. Amazon itself fulfills orders from one, Techno Intelligence, thus giving its Prime members -- customers who have paid an annual fee for bonus features -- free two-day delivery.

But those resellers price the Surface RT significantly higher than Microsoft, and often display an inflated list price, practices that have prompted criticism from customers.

Techno Intelligence, for example, prices the 32GB Surface RT without a Touch Cover at $599, or $100 more than Microsoft. The 64GB model with the cover-cum-keyboard costs $812, or $113 above Microsoft's price.

Amazon resellers also use inaccurate list prices to show exaggerated discounts.

For instance, Techno Intelligence claims that the list price of the 32GB Surface RT without a cover is $999.99, for a "savings" of $400.99. A reseller whose orders are not fulfilled by Amazon insisted the list price of a 32GB Surface RT with a Touch Cover was $899, $300 more than the actual Microsoft price for the same device.

Amazon's customers noticed.

"This product sells for $499 in the Microsoft store, and it is unfortunate that Amazon is allowing the re-seller to sell at a price that is significantly higher than Microsoft's MSRP," wrote Mitch Jensen in a review of Techno Intelligence's 32GB Surface listing. "Many people will purchase this product with the belief that they are saving money, when they are in fact paying significantly more than they should."

In other reviews, customers blasted what they called price gouging by Amazon resellers, labeling the practice "disgusting," a "rip off" and "a disgrace."

As of Tuesday, the Surface RT is available only through Microsoft's 60-plus retail outlets -- which include 34 temporary "pop-up" stores that will be open only during the holidays -- and the company's online store. Microsoft's site shows the Surface RT's current retail sales locations.

Microsoft has not disclosed early sales figures for the Surface RT or specified a sales target for the tablet, the first designed by the software firm.

But last week the Wall Street Journal's AllThingsD blog stirred up a hornet's nest when it reported that Detwiler Fenton, a Boston-based brokerage firm, had slashed its fourth quarter sales estimates from 1 to 2 million tablets to between 500,000 and 600,000.

"Lack of distribution is killing the product," Detwiler Fenton said in the client note reported by AllThingsD.

Some analysts have argued that Microsoft may not want to sell large numbers of the Surface RT for fear that success would alienate its computer- and tablet-making partners, the so-called "OEMs," for "original equipment manufacturers."

Expanding the tablet's distribution to high-profile retailers -- such as Best Buy or Wal-Mart -- would hint that Microsoft is willing to risk enraging long-time OEM partners even more than it already has.

Next month Microsoft will ship the Surface RT's follow-up, the Surface Pro, a tablet powered by Windows 8. The Surface Pro will be priced at $899 and $999 for 64GB and 128GB configurations, with the keyboard-slash-covers selling separately for $120 and $130.

The company has not revealed the distribution channels that will handle the Surface Pro.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

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