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© aleksandr volkov dreamstime.com Electronics Production | November 13, 2012

Surface’s pricing not aggressive enough

With the open for pre-order, Microsoft officially announced the price of Surface featuring the Windows RT operating system and a 10.6” display.
Its entry-level model starts at $499 with the storage of 32G and $599 for the version with a Touch Cover keyboard. The price meets the estimation calculated based on costs and profits, which is not particularly appealing in the market where the competition is fierce. It has limited support to lift Windows RT’s status among the tablets, according to WitsView, the panel research division of TrendForce. WitsView tends to be conservative toward Surface RT shipment with an estimation of 2.5 million unit shipment in 2012. Although a price tag of $499 is located in the mainstream price range between 9.7” and 10.1” tablets but it shows no particular amazement, indicated by Eric Chiou, the research director of WitsView. Compared to Apple’s iPad family, which holds the biggest market share, Surface’s price is the same as New iPad, but New iPad carries the resolution of QXGA(2048x1536), one whole grade higher than Surface RT’s WXGA(1366x768). When comparing their resolution density (PPI), Surface RT’s 148PPI lags far behind New iPad’s 264 PPI. Compared to iPad2 , which is at the same resolution grade and priced at $399, Surface RT seems expensive with a $100 price gap. In view of the storage, Surface’s entry-level model carries 32G, double the 16G equipped in iPad entry-level model, but this could be the strategy in response to larger APP file size under Windows RT. It remains to see if consumers can benefit from the bigger storage. In addition to Surface’s price itself, Eric Chiou said that, Touch Cover keyboard’s sales strategy is also quite intriguing. The market has been highly anticipated about Windows attacking tablet market, in the hope of having a mobile device that can be highly integrated to PC, allowing businessmen and students to carry common software, such as Office, with them at anytime, in anywhere they wish. To show PC platform’s advantages, the keyboard is a very important control interface, however Touch Cover keyboard is not viewed as the standard accessory but sold at an extra payment of $100, reducing Surface’s competitiveness as a product featuring PC operating system and users’ habits. From another point of view, Surface’s pricing strategy seems to show the compromise resulted from cooperation between Microsoft and several brands. The price gap between Surface and various tablets launched by PC brands is basically within $100. Although PC brands focus on smaller 10.1W WXGA tablets, PC brands still have chances to fight under the condition of similar prices and resolution, the room for survival is not completely squeezed by Microsoft’s in-house Surface tablet, Eric Chiou added. According to WitsView, three versions of Surface RT priced between $499 and $699 can be interpreted as Microsoft adopting a soft and modest attitude toward the penetration strategy in the tablet market. However the price basis not only has very limited replacement effect to Netbook averagely at $299, but also overlaps some Notebooks’ price range. Under the condition of featuring similar functions, it cannot avoid the situation that Microsoft operating system families fight against each other, leading to squeezed sales. WitsView tends to be conservative toward Surface RT shipment with an estimation of 2.5 million unit shipment in 2012.
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