On Tuesday, everyone sighed with relief when Microsoft revealed its Surface tablet pricing. Apparently, I'm the only one who thinks these prices are too high across the board.
The 32GB is $499 in the US, £399 in the UK, and that’s with no keyboard – it’s an additional £80 to £100 (depending on the colour) bundled with the cover, which probably costs all of a fiver to manufacture in China. The loaded 64GB model comes with a cover for £559.
Yes, if this was an Apple product, it would be priced similarly. But it isn't, and to compete with an Apple product, it must be priced aggressively lower. Apple always prices at a premium. It has made an art out of premium prices. Microsoft has not and cannot price the same way.
To make matters worse, the prices are for the ARM-based Windows RT tablet.
Considering the fact that Microsoft will probably sell most of these devices via its own channels and stores, the company can afford to trim the profit margins and price the devices aggressively. But no, it is swinging for the fences. Who knows how costly the actual Windows 8 version will be.
Here's how the RT device should be priced: $299 for the 32GB model with keyboard cover in the US, and the loaded 64GB model should be $399, with UK prices dropping in line with that (to around the £250 mark for the base model).
That's it – then I’d buy one.
Microsoft, which is still amateurish when it comes to direct sales to the public, is also making the classic Microsoft mistake of projecting failure. It does this constantly in its advertising.
Two examples that come to mind are the Vista ad which showed the futuristic secret OS that got everyone worked up. "This is great. I want one," everyone said. Then the company revealed it was actually Vista and not something for the future. This sent the message that Microsoft screwed up the marketing somehow.
Another ad portrayed various idiots so enamoured with their phones that they were getting injured because the phone was so compelling. The Microsoft phone was nothing like that. In fact, the ad made it seem that it wasn't even remotely interesting.
Microsoft has made the rookie mistake of pricing the product too high initially. I assure you it will quickly lower the cost, which will make the public think, "Oh, it must not be selling. It must be a dog. I won't buy one now."
This sort of product should be priced on the learning curve, which is a future lowest-price where all the manufacturing discounts kick in. But to fully understand how that works, Microsoft needs someone who was in the hard disk business, which constantly priced for the future cost of manufacturing.
Whatever the case, the Surface tablet will not sell at its listed price unless people take a liking to the new interface, and there is no evidence that they will.
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