The prickly problem of how to price Surface

By Kip Kniskern | Posted November 29, 2012 22 comments

surface-proMicrosoft announced some pricing details of the second in its family of Surface devices today, with Panos Panay, in a blog post on the Official Microsoft blog, detailing pricing on the two versions of Surface “Pro” (the full on Windows 8 version):

Today, I want to share a bit more detail about the growing Surface family of products and Surface with Windows 8 Pro, specifically around pricing. In January, Surface with Windows 8 Pro will be available in two versions and pricing will start at $899:

· 64GBstandalone version at $899

· 128GBstandalone version at $999

Both versions will both include a Surface pen with Palm Block technology and include the ability to use a Touch Cover or Type Cover (sold separately).

While this pricing is generally in line with what was expected, and in fact maybe even a little lower, Microsoft’s decision to price the Touch Cover separately (currently at $120, with the Type Cover at $130), coupled with an understandable decision not to aggressively price the Surface to compete with, and outdo Microsoft’s OEM competitors, means that almost by definition, the Surface is not going to be a great deal.

Microsoft has painted itself into a bit of a corner with Surface.  On the one hand, Surface is supposed to be, and Microsoft needs it to be, a showcase product for all that Windows 8 and Windows RT can be, both in terms of style and functionality, and as an alternative to tablets like the iPad, the Kindle, and a host of Android devices.

But on the other hand, Microsoft’s partners were upset with the late and totally unexpected appearance of the Surface, and Steve Ballmer and co. can’t afford to alienate the OEMs any more than they already have.

So while the seemingly obvious course, as Amazon is doing with Kindle, is to offer up Surface as somewhat of a loss leader – getting Windows 8 and the Windows 8 Store in as many hands as possible as quickly as possible by undercutting the competition and making Surface and almost irresistible buy, just isn’t going to happen, not while Microsoft still has to appease OEMs.

That leaves Surface only to be a shining light on how a Windows 8 machine should and could look, but leaving it up to the OEMs to follow its lead and come in at a price point that will compete with the iPad.

Or of course, Microsoft could drop the price on its Surface family, something that’s already rumored to happen.  But that means going head to head with its OEM partners, and is Microsoft ready to do that?

For Windows enthusiasts, the Surface RT is an interesting device, and the Surface Pro may be their next laptop, and their next tablet, too.  For other (most?) consumers, there are better deals out there, and Microsoft is going to have a hard time gaining much traction with the Surface with the section of the market it most needs to go after, those flocking to Apple (and increasingly, Android) devices, especially without further alienating the OEMs.

How’s that for a rock and a hard place?

Posted November 29th, 2012 at 11:36 am
Category: Opinion
Tags: Surface
  • bnlf

    any high end ultrabook is a lot more expensive than surface. I really dont get whats wrong with surface price. Do you want it to cost the same as an ipad? do you know the difference between a full desktop and a tablet? because im not sure if your comparing a tablet to a high-end pc in a form of a tablet.

  • bnlf

    any high end ultrabook is a lot more expensive than surface. I really dont get whats wrong with surface price. Do you want it to cost the same as an ipad? do you know the difference between a full desktop and a tablet? because im not sure if your comparing a tablet to a high-end pc in a form of a tablet.

  • http://twitter.com/surilamin surilamin

    I think it’s a good price. If you look at the specs, it’s more of an ultrabook type machine. I think these higher prices will actually be good in the long run because Microsoft will produce premium quality hardware instead of cheap hardware like the Kindle.

  • http://twitter.com/surilamin surilamin

    I think it’s a good price. If you look at the specs, it’s more of an ultrabook type machine. I think these higher prices will actually be good in the long run because Microsoft will produce premium quality hardware instead of cheap hardware like the Kindle.

  • http://www.facebook.com/khris Khristopher Ranger

    Way beyond what I can afford!

  • Khristopher Ranger

    Way beyond what I can afford!

  • stuxstu

    I’ll have to think long about spending that amount… I was thinking of getting one for my son, but at 899 + 130 for a keyboard I am not so sue anymore. I thought 799 would be stretching the budget. Now over 1k + tax…

  • stuxstu

    I’ll have to think long about spending that amount… I was thinking of getting one for my son, but at 899 + 130 for a keyboard I am not so sue anymore. I thought 799 would be stretching the budget. Now over 1k + tax…

  • http://twitter.com/TheNetAvenger The Net Avenger

    The pricing is mid range, and when you compare it to non-Windows devices, the pricing is impressive.

    People keep referring to Ultrabooks and the iPad, which is good, as this device is a bridge between the two; however, it also offers features that NEVER of the comparative products offer.

    This is a real PC with i5 and DX11 capable graphics, yet is lighter than Ultrabooks and has equivalent battery times.

    When contrasted to ‘tablets’ like the iPad or even the lower end touch only devices, people overlook that it is a full digitizer class touch/stylus screen capable of graphics and drawing at a high end Wacom tablet level.

    It also outpaces traditional Ultrabooks in that it isn’t ‘stuck’ being in a notebook form factor and has a touch screen.

    Users can add their own Bluetooth/USB keyboard mice to the unit, which most gamers and users will do, as being a full PC will want their higher end input devices than the soft touch cover. If Microsoft bundled the touch cover, people would complain as a large portion will not want or need it.

    So to recap:

    Compared to iPad/Android Tablet
    ….Full PC, not just a Tablet
    ….Can run Crysis 2, WoW, Photoshop on day one.
    ….Digitizer Class display with pen and touch with pressure sensitive input for graphics
    ….Digitizer display also offers FULL and impressive handwriting recognition

    Compared to an Ultrabook
    …Lighter
    …Better battery life
    …Not locked to notebook form factor
    …Touch screen / digitizer class with handwriting
    …Windows 8 Store Apps will touch features

    So for the price, it isn’t dirt cheap, but isn’t insanely overpriced, and yet also has a build quality with the composite body and Screen Quality that makes even the iPad feel cheap.

    As for OEMs being ‘hurt’ by the RT price, they did pull products in protest. The problem is that in the non-RT/ARM realm they don’t have other options for their products and can’t just fall back to a low end Android experience. So they can’t protest too much or they will lose out PC/Notebook/Tablet sales in this class.

    • http://twitter.com/shameermulji Shameer Mulji

      You make many excellent points. Well said. The Surface Pro is definitely a compelling device. There’s a couple of points I was to make. As far the as the price goes, it is definitely out of the range of your average consumer but for business professionals or enterprise users that need (key word being need) these features, I can definitely see the Surface Pro being a popular choice.

      Comparing the Surface Pro to the iPad is like comparing apples to oranges. They’re not in the same league of device when you compare price / performance / features. The iPad is a direct competitor to the Surface RT, both of which are “pure” tablet devices. The Surface Pro competes more in the ultrabook segment.

      But again, pretty much most of what you said, is spot on.

  • http://twitter.com/TheNetAvenger The Net Avenger

    The pricing is mid range, and when you compare it to non-Windows devices, the pricing is impressive.

    People keep referring to Ultrabooks and the iPad, which is good, as this device is a bridge between the two; however, it also offers features that NEVER of the comparative products offer.

    This is a real PC with i5 and DX11 capable graphics, yet is lighter than Ultrabooks and has equivalent battery times.

    When contrasted to ‘tablets’ like the iPad or even the lower end touch only devices, people overlook that it is a full digitizer class touch/stylus screen capable of graphics and drawing at a high end Wacom tablet level.

    It also outpaces traditional Ultrabooks in that it isn’t ‘stuck’ being in a notebook form factor and has a touch screen.

    Users can add their own Bluetooth/USB keyboard mice to the unit, which most gamers and users will do, as being a full PC will want their higher end input devices than the soft touch cover. If Microsoft bundled the touch cover, people would complain as a large portion will not want or need it.

    So to recap:

    Compared to iPad/Android Tablet
    ….Full PC, not just a Tablet
    ….Can run Crysis 2, WoW, Photoshop on day one.
    ….Digitizer Class display with pen and touch with pressure sensitive input for graphics
    ….Digitizer display also offers FULL and impressive handwriting recognition

    Compared to an Ultrabook
    …Lighter
    …Better battery life
    …Not locked to notebook form factor
    …Touch screen / digitizer class with handwriting
    …Windows 8 Store Apps will touch features

    So for the price, it isn’t dirt cheap, but isn’t insanely overpriced, and yet also has a build quality with the composite body and Screen Quality that makes even the iPad feel cheap.

    As for OEMs being ‘hurt’ by the RT price, they did pull products in protest. The problem is that in the non-RT/ARM realm they don’t have other options for their products and can’t just fall back to a low end Android experience. So they can’t protest too much or they will lose out PC/Notebook/Tablet sales in this class.

    • Shameer Mulji

      You make many excellent points. Well said. The Surface Pro is definitely a compelling device. There’s a couple of points I was to make. As far the as the price goes, it is definitely out of the range of your average consumer but for business professionals or enterprise users that need (key word being need) these features, I can definitely see the Surface Pro being a popular choice.

      Comparing the Surface Pro to the iPad is like comparing apples to oranges. They’re not in the same league of device when you compare price / performance / features. The iPad is a direct competitor to the Surface RT, both of which are “pure” tablet devices. The Surface Pro competes more in the ultrabook segment.

      But again, pretty much most of what you said, is spot on.

  • guest

    I’m with you Kip. The logic of MS’s overall strategy for Surface (both flavors) is unclear. Even the positioning of WinRT is difficult to understand.

  • guest

    I’m with you Kip. The logic of MS’s overall strategy for Surface (both flavors) is unclear. Even the positioning of WinRT is difficult to understand.

  • http://windows8.myblog.it/ Germano Costi

    Overcharge!

  • http://windows8.myblog.it/ Germano Costi

    Overcharge!

  • Lucas Nobre Silveira

    I think the Surface Pro is great deal. We have a really great tablet, and really great Ultrabook and the price is very nice while we can buy tablets which have almost the same price, but which have a mobile platform and not a full Windows experience. Compare the price with the Samsung ATIV Smart PC.

  • Lucas Nobre Silveira

    I think the Surface Pro is great deal. We have a really great tablet, and really great Ultrabook and the price is very nice while we can buy tablets which have almost the same price, but which have a mobile platform and not a full Windows experience. Compare the price with the Samsung ATIV Smart PC.

  • chinch987

    Weighing all things including OEMs it’s probably the best idea to charge more to early adopters and lower the price in early 2013 when more Win8 Apps are released anyways. I’m sure SurfaceRT cost will be lowered if OEMs fail to sell and create WinRT products.
    MS can’t undercut OEMS at this point though, and it’s not needed.
    Haters will hate regardless of the price and $999 w/ bundled cover/keyboard for this calibre touch “laptop” is very good.

  • chinch987

    Weighing all things including OEMs it’s probably the best idea to charge more to early adopters and lower the price in early 2013 when more Win8 Apps are released anyways. I’m sure SurfaceRT cost will be lowered if OEMs fail to sell and create WinRT products.
    MS can’t undercut OEMS at this point though, and it’s not needed.
    Haters will hate regardless of the price and $999 w/ bundled cover/keyboard for this calibre touch “laptop” is very good.

  • http://twitter.com/marknoble Mark Noble

    With a typecover it’s comparable in price to a MacBook Air, has one less USB 3 port, same processor, higher resolution, pen, multitouch touch screen, is a third of a cm thinner and a third of a lb lighter.

    Seems like a better deal to me by far.

  • http://twitter.com/marknoble Mark Noble ⚡

    With a typecover it’s comparable in price to a MacBook Air, has one less USB 3 port, same processor, higher resolution, pen, multitouch touch screen, is a third of a cm thinner and a third of a lb lighter.

    Seems like a better deal to me by far.