Thanks to the Kindle Fire HD, expect bargain-basement prices for Microsoft Surface Windows 8 tablets

Microsoft has yet to announce pricing for its Surface line of Windows 8 and Windows RT tablets, but thanks to the Kindle Fire HD's $199 pricetag, you can expect a Surface tablet to cost $299 or less. So says an analyst, and I think he's on target.

Shaw Wu, an analyst with Sterne Agee, wrote this in a recent research note after the Kindle Fire HD announcement, according to GeekWire:

"We believe the pressure for MSFT to price its Surface tablet aggressively is now greater than ever. Initial press reports indicated a price point of $599, a premium to the new iPad, but we now believe it will likely need to price at $299 or lower to give it a fighting chance."

An argument can be made that the Kindle Fire HD and the Surface tablet aren't comparable devices. The Kindle Fire HD isn't designed to be an all-purpose tablet, and is primarily a way to buy and use Amazon's ecosystem of entertainment content, while the Surface is an all-purpose tablet.

That's true, but consumers won't see it that way. They'll see that a 7-inch Kindle Fire HD sells for $199, and the 8.9-inch model will sell for $299, and figure that's what the going price should be for a tablet. And considering that the Google Nexus 7 sells for $199, they'd be right.

The question is whether Microsoft can make any money at the $299 price point. It's not clear that the company can. In his note, Wu addded, according to Market Watch:

We believe the end game is that profitability in tablets outside of Apple will be non-existent given Amazon's aggressive pricing stance."

He's not alone in thinking that. Market Watch quotes Peter Misek of Jefferies & Co. as saying that because of the Amazon low pricing:

"It will become exceedingly difficult for others to enter the tablet market...We see very little chance that Dell and HP can successfully attack the consumer market with Windows 8 tablets."

Despite that, Microsoft will push its tablets and those of its partner, heavily. After all, Windows 8 was designed more for tablets than it was for PCs, so it has no choice. What's bad for Microsoft, though, will be good for consumers. Expect plenty of good deals on tablets when Windows 8 ships.

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