Wednesday, August 15, 2012

A Surface Tablet for $200?

Engadget claims that the low-end Microsoft Surface Tablet will cost $199. That would make it comparable with the Google Nexus, Amazon Fire, and Nook tablet. The Surface will have superior hardware than these. It will have a larger screen, more memory, and come with a cover that doubles as a keyboard.

The other tablets are sold at cost or just above. The purpose is to lock the user into the vendor's ecosystem where the real profits are.

Microsoft is probably playing this game, also but in their case they are almost certainly subsidizing their tablet. If true, it is a risky move but it might be their last chance to stay relevant.

Windows 8 looks like it will be a disaster similar to the original Vista roll-out. Businesses are still rolling out Windows 7 and many are planning on holding off on Windows 8 or waiting until Windows 9. The main attraction of Windows 8 is that it has a unified interface with Microsoft's phones and tablets. But this only matters to people who actually have a Microsoft phone or tablet.

When Microsoft announced the Surface and said it would be competitive, people assumed that they meant competitive with the iPad. That means $500. This is too much for an impulse purchase. $200 is low enough for people to try it without a strong commitment. Also, given the larger screen and keyboard, it could pull away a lot of the Nexus and Fire business.

Android is not firmly established on the tablet. The most successful Android tablets, the Kindle Fire and the Nook Tablet, hide android completely. This gives Microsoft an opening that might not exist a year from now.

This would not be the first time Microsoft subsidized a device in order to gain market share. They originally lost money on their game platform. In that case, they were successful but subsidies do not guarantee success. Their attempt at creating an alternative to AOL back in the days of dial-up flopped.

At $200, I might be tempted to give the Surface a look. It depends on what software I can run. Right now I have a lot of books in Nook, Kindle, and EPub format. If the Surface can run all of those applications then I might consider it.

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