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

Misses opportunity to expand tablet market, take it to Apple and its iPad

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Some of the experts didn't shy from comparing prices of the Surface RT and the iPad, saying that consumers certainly would.

"[The Surface RT] is not a PC," said Milanesi, "or a PC replacement. So from consumers' perspectives, they will look at it and say, 'This is a tablet. What I know about tablets is that I know about the iPad.' So it may come down to a 'religious' perspective, with those considering the Surface RT people who would never buy an Apple product."

That's a relatively small market, she emphasized. "This is a very high-end position for someone coming late to the tablet party," Milanesi said. "The hardware is really good, but from a price perspective, they would have had a much bigger impact at $399."

Even IDC's Mainelli, who did tag the Surface RT's opening price as aggressive, worried that Microsoft blew an opportunity.

"At $500 for the whole package I think a lot of people would pull the trigger [but] at $600 it's a harder sale, especially with the current lack of RT apps," Mainelli said, talking about the $499 Surface RT sans a Touch Cover and the $599 model with one.

Microsoft, of course, has a partner ecosystem it has to keep in mind, something Apple, Google, Amazon and other tablet makers do not. That may have contributed to the pricing decisions Microsoft made, said Milanesi.

"On the plus side, these prices are good for the partners," she said of the room they may have to compete with the Surface RT, or even undercut it. "Microsoft had to price the Surface RT only to sell enough. They cannot flop, they have to show some traction. That's why I still think [the Surface RT] is a marketing tool for them, a way to display Windows."

Gottheil, however, remained unconvinced that Microsoft's pricing strategy was smart, or that it even had a strategy. "It's going to be very hard to explain the value proposition to consumers," he said. "The one hope they had was to show good price-performance."

So who will buy a Surface RT at these prices?

"It's not going to be bought by someone who would buy an iPad, or even an Android tablet," Gottheil argued. "I think it's for a very specific market: consumers who have a primary PC, want a tablet, and for whom Office is very important. But it's not even clear if Office will not be available on Android or iOS.

"I just don't see this a successful product concept at this point," Gottheil concluded. "It's always been a problem child. It's poorly defined and poorly positioned. It would be a mystifying product even at a considerably lower price."

Customers in eight countries -- Australia, Canada, China, France, Germany, Hong Kong, the U.K. and U.S. -- can pre-order a Surface RT from Microsoft's online store, which today promised delivery by Oct. 26.

The Surface RT will also be sold in all Microsoft retail stores starting Oct. 26, including the 34 holiday "pop-up" stores it's assembled in malls and shopping centers in the U.S. and Canada.

Computerworld's Matt Hamblen contributed to this report.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is

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Copyright © 2012 IDG Communications, Inc.

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