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Microsoft sets $100 Surface Pro discounts in stone

Tacit admission that original prices were too high

By Gregg Keizer, Computerworld
August 30, 2013 07:21 AM ET

Computerworld - Microsoft yesterday made permanent the $100 price cut to its Surface Pro tablet that it ran as a temporary sale through most of August.

Surface Pro devices rely on Windows 8 Pro and Intel processors, rather than the stripped-down Windows RT and lower-powered ARM processors of the Surface RT. Surface Pro tablets can run traditional Windows software, often called "legacy" software, like the full-featured Office 2013 productivity suite.

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Sale prices were first unveiled Aug. 4 and were to run only through Aug. 30, or until supplies lasted. The discounts were available only in the U.S., Canada, China and a few other markets.

According to Microsoft, the Surface Pro permanent prices will be the sales prices: $799 for the model with 64GB of storage space, $899 for the one with 128GB.

Touch Cover prices will start at $79.99, $40 off the former price, and Surface RT-Touch Cover bundles, which were also discounted, will start at $399, $50 lower than originally. The more keyboard-like Type Cover, however, will remain $129.99.

The cheaper prices will be extended to all markets where Microsoft sells the Surface.

"The customer response to recent Surface pricing and keyboard-cover promotions has been exciting to see, and we are proud to begin rollout of Surface Pro, Touch Cover and Surface RT bundles at even more affordable prices starting August 29," a Microsoft spokeswoman said in an email.

Late Thursday, however, the Microsoft Store did not show all the new prices.

The Surface Pro discounts followed even more aggressive Surface RT price cuts in July. Then, Microsoft slashed the price of the Surface RT by up to 30%, reducing all models by $150.

Although Microsoft is expected to unveil new Surface tablets this fall, it's had a hard time unloading the first-generation inventory. For the quarter that ended June 30, Microsoft took a $900 million charge against earnings to account for excess stock of the Surface RT, and unspecified components and accessories.

According to one analyst, that write-off was probably the precipitating event that pushed Microsoft's board of directors to shove CEO Steve Ballmer out the door.

Microsoft has also heavily discounted the Surface RT in offers to schools, and given away thousands of the tablets at various conferences this year.

The Redmond, Wash., company could revert to the earlier, higher prices with new models later this year, but that seems unlikely considering the difficulty it's had selling its tablets. For the period October 2012 through June 2013, Microsoft recorded just $853 million in revenue from its first foray into computing devices.

A 32GB Surface RT with a Touch Cover now costs $399, or 33% less than the price when the tablet debuted last October. The entry-level Surface Pro with a Touch Cover now runs $878, or 14% less than in February, when the more capable tablet-notebook hybrid launched.

Microsoft's August sale price for the Surface Pro has become the permanent price.

Originally published on www.computerworld.com. Click here to read the original story.

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