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Wednesday, October 17, 2012

Microsoft Surface To Submerge

Microsoft has finally announced the pricing of the Surface with Windows RT tablet: it starts at $499, without the keyboard cover. Oh, you wanted the keyboard cover? $599. $499 gets you a 10.6", 1366 x 768 screen, Tegra T30 chip with 2 GB of system RAM and 32 GB of storage. What's wrong with this picture? It's up against the iPad at the same price point, with a far higher resolution screen and an unmatched library of apps.

Microsoft needed to get a solid hardware base in order to attract app developers, and there's really only two ways to do that in a marketplace where Apple has around 75% market share. Either you make a stunningly better device at the same price, or you deliver a pretty good device at a much lower price. Microsoft's Surface, while a nicely designed piece of hardware, is not clearly superior to the iPad (and is arguably weaker, with a screen of far less resolution and a slower processor). Microsoft really needed to bite the bullet and price the base model tablet at $299 or less.

Lose money on every unit? Are you crazy? Like a fox. That's exactly how Microsoft made a bundle on the Xbox 360; they were willing to lose hundreds of dollars on each unit sold for years. Now they're raking in huge profits, because every game developer is supporting their platform. Why? Because there's a huge installed base now. The same strategy could work for the Surface, but now we can see that Microsoft is not planning to lose a billion or two selling Surface tablets at a loss.

Microsoft must be counting on the inherent fan appeal of Windows (huh?), and of course the spill-over effect of the incredibly successful Windows Phone (if only) to drive Surface tablet sales. Really. Of course, the elegant, crystalline clear naming strategy (Surface for Windows RT... and don't confuse that with Surface for Windows Pro, because thought they have a similar interface they don't run the same software.... unless it's been written that way... and make sure you buy the right one!) and compelling marketing (TV ads showing people dancing will of course make people want to buy this tablet) means that Microsoft won't have to resort to anything as crass as bribing people to buy their tablets.

Uh huh.

Let's not forget about the gaming possibilities.. Wait, I guess Microsoft did, because I see no mention of gaming anywhere in their PR. Who cares, it's only the largest app category on mobile devices. Besides, gamers wouldn't be buying tablets this expensive just to game on anyway. See? Problem solved!

It's kind of sad, really. Microsoft used to have some tech savvy, and some mojo. They are trying; the hardware design of the Surface looks interesting, and the Windows 'Metro' interface (which for some reason can't be called that any more, and there is no other name... more marketing genius) has won kudos. That's all not enough. Apple and Google own the mobile device marketplace, and nobody is going to buy Microsoft devices or software unless it offers a serious advantage. Which it doesn't. So now you have price... and fortunately Microsoft has over $40 billion in the bank, which it could use to lower the hardware price to make it irresistible. An iPad competitor at the same price? Meh. An iPad competitor at $199? Then you've got a chance at some serious market share.

Apparently, though, Microsoft has decided it doesn't need that. Maybe they think, like Nintendo, that they can always lower the price later if they need to. By the time they figure that out, though, the world will have judged their platform, found it wanting, and moved on. As will the developers.

Meanwhile, Apple is about to announce the iPad Mini, and will probably sell as many as they can make for months. It'll be hundreds less than a Surface, and it will have a zillion apps for it right away. Oh, and by an amazing coincidence, Apple has scheduled their unveiling just 3 days before Microsoft launches the Surface.

Surface who?

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