Suddenly everybody is a pricing expert – especially when comparing the Microsoft Surface and iPad markets, there has been no shortage of at-large opinions. People love their iPads, but there appears to be great curiosity on the new Microsoft devices. Earlier in the week a leak revealed Microsoft Surface pricing on a number of sites. Those prices were later confirmed and then uproar has ruled the days since. With that action, Windows 8 RT tablet has accomplished what it was designed to do – shake things up. The scaled-down low-power RT tablets have entered the market, and opinions are all over the place. Among the concerns – the prices are much too high, who is the target market, the price point can’t contend with iPad, what is up with all these additional cover prices, there is no ecosystem, and on and on. To start – they are not competing with Amazon or Google, this is all about the iPad and yet they are delving in a new tablet market altogether that most talk about very little.
This version of Surface will start at $499, $599 for the keyboard/cover, $699 for the 64GB. There will be a lot of attention on how these sell and if Microsoft can get some more momentum in the Windows Store. There are currently only about 1,000 apps there, with nothing along the lines of any “killer” apps there. The Office 2013 ‘preview’ is expected soon and Netflix did just come out last week. I imagine apps that integrate around Skype will pop up in the next few weeks as well .
But here’s the thing – Microsoft just sold out on pre-orders of the 32GB model and is back-ordered for three weeks. That only took one day, so there definitely appears to be a market. The question here is what is the value proposition and how it compares to iPad. Windows RT is designed to work exclusively with apps that come from the Windows Store. That means it is very similar to the iPad proposition from the app perspective. The features proposition is rather strong as well including:
- Expandable storage
- The recently announced Xbox music
- Free Office Suite
- new Windows 8 features like Easy Sharing
- HDMI connectivity
- Skype integration
- SkyDrive integration
Still people will be looking at this price and compare it to the iPad –
- 16 Gb iPad is $499
- 32 Gb Surface is $499
Coincidence? Hardly. Indeed, some will point to this and question how they intend to take on the iPad, when that device is so dominant. The answer is simple, Google and Amazon can have the low end of the market, and Microsoft will duke it out with Apple on the high end. The strategy plays out quite simply – with a comparative device at the same price-point as Microsoft’s “low-end” device, the real move here is the Surface Pro.
Enter the Surface Pro
The Surface Pro is expected in another three months from now. These devices will run the full version of Windows 8, not the RT version and runs higher end hardware all around. This device is designed to attract the enterprise – essentially a full-powered machine that can run legacy software, can be provisioned, managed, and secured. The iPad and for that matter any Android device cannot compete with that aspect as they are more geared for occasional consumption. Perfect for the consumer. To date, they cannot run Office, they cannot run desktop mode, are not typically expandable or are missing other things that are attractive to the enterprise. The Surface Pro devices are projected to cost in the range of $1000 dollars.
Still, Microsoft has a task ahead to convince consumers to look at the Surface RT versus the iPad. They need to sell a smooth but new experience that consumers will embrace and eventually, fairly soon will extend into the enterprise experience. Whether that is successful remains to be seen. If it does, the Windows Surface RT doesn’t have to undercut the iPad in price, taking losses along with it. The RT becomes an entry-point into the new world of Windows 8. Selling out on pre-orders and being on backorder is a good sign that there is interest and is a great sign for Microsoft, who has reportedly targeted the production of millions of the devices this year. When the Surface Pro hits there is a possibility that a new kind of enterprise market will be ready with open arms to embrace it. An enterprise tablet platform is certainly overdue. Microsoft’s past efforts to meet this need have not largely captured this. Various versions of Windows 7 and accompanying hardware just haven’t seen the kind of adoption that was expected. The timing is right with Microsoft taking the reigns and doing the hardware themselves, they have an attractive new OS to go along with it and look to be building the momentum they need to get this done.