Microsoft's Surface tablet already can't compete

Despite plenty of buzz leading up to Microsoft's Surface tablet announcement, the expected price points don't pose much of a threat to Apple's iPad.

In the last few months since the initial announcement of its Surface branded tablets, Microsoft hasn’t said much about its upcoming product line-up. The relative silence actually had some folks wondering if there were some sort of undisclosed issues with Surface that could delay the launch. These last couple of weeks, though, there has been a huge uptick in Microsoft/Windows 8/Windows RT-related news, culminating in today’s announcement that revealed many more details regarding Windows RT-based Surface tablets and their associated accessories

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The Evolution of the Tablet PC

A 32GB Surface tablet with brightly- colored Touch Cover will set you back $628; a black Touch Cover bundle is also available for $599.

Unfortunately, Microsoft isn’t being nearly as aggressive with pricing as some have speculated. Those sub-$300 price points that were bandied about after the initial Surface announcement aren’t happening. In fact, there’s an argument to be made that Surface pricing isn’t even competitive if the entire ecosystem is taken into consideration. Let me explain. Here’s what Microsoft disclosed about pricing earlier today:

"Surface with Windows RT will initially be available in three SKUs: a 32GB version priced at US$499, a 32GB version bundled with a black Touch Cover priced at US$599, and a 64GB version bundled with a black Touch Cover priced at US$699. A variety of accessories will also be available, including Touch Covers in five vibrant colors — black, white, magenta, cyan and red — priced at US$119.99 …Customers will also have the option to purchase a Type Cover in black for US$129.99, which adds moving keys for a more traditional typing feel."

On the surface (no pun intended), $499 for a 32GB, quad-core Windows RT-based Surface tablet may seem somewhat competitive, considering a 16GB iPad with only a dual-core SoC is available for the same price. Keep in mind, however, that the current-gen iPad has a much higher-resolution screen, a far more diverse selection of apps, a more mature ecosystem, excellent build-quality, and a massive install base, which virtually ensures a constant influx of new apps and development. The Surface tablet’s build quality should be comparable, but Microsoft has no hope of catching Apple in the short-term in the app department—remember, Windows RT-based Surface tablets cannot run any traditional x86 applications, so it’s WinRT apps or nothing. The Surface tablet’s 1366x768 screen resolution is also a fraction of the iPad’s 2048x1536 “Retina” display.

If Microsoft threw in the Touch Cover at that $499 price point, then there would have been a clear, tangible benefit to purchasing a Surface tablet over an iPad, in addition to the additional storage and quad-core SoC. It seems almost as if Microsoft is taking the traditional PC approach to Surface pricing and using a couple of technically higher specifications to justify a higher price.

All other things being equal, that’s a fair step to take. But all other factors aren’t equal in the tablet market. If Microsoft wants to steal customers away from Apple, the company has to do something to clearly make Windows RT-based Surface tablets a better buy than an iPad, and I don’t think they’ve done that. The balance shifts significantly when Windows 8-based x86 Surface tablets arrive in January that can run any Windows application, but for now and through the holiday season, Windows RT-based Surface tablets will be fighting one heck of an uphill battle.

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