Is Surface price too steep to lure iPad set?

The Seattle TimesOctober 21, 2012 

Microsoft Surface

FILE - In this June 18, 2012, file photo, Microsoft Corp.'s new Surface tablet computer is displayed at Hollywood's Milk Studios in Los Angeles. Microsoft's first tablet computer, the Surface, will start at $499 when it goes on sale Oct. 26. The price matches that of Apple Inc.'s iPad, the most popular tablet computer, but the base model of the Surface has twice as much storage memory: 32 gigabytes. The screen is also slightly larger. The signature hardware feature of the tablet, a cover (AP Photo/Damian Dovarganes, File)

DAMIAN DOVARGANES — AP

— Is a Microsoft Surface tablet priced at $499 good enough to entice you away from that Apple iPad you might be considering?

That’s the question Microsoft faces now that it has announced the starting price of Surface with Windows RT, the company’s first branded tablets, launching Friday.

The Surface is Microsoft’s first foray into making its own branded computing devices.

It’s part of Microsoft’s larger efforts – including the launch of Windows 8, also on Friday – to gain a foothold in the mobile market.

Whether it can break through and get people’s attention enough for them to try out and buy it is the big question.

Ads for Surface have already started running.

And though the prices are “not as aggressive as I would’ve liked to have seen them get,” said Tom Mainelli, an analyst with research firm IDC, “I think it’s competitive.”

The Surface will be available for pre-order online or for purchase starting Friday in Microsoft Stores, as well as the 34 holiday pop-up stores Microsoft is opening. It will also be available for sale online in the U.S., Australia, Canada, China, France, Germany, Hong Kong and the U.K.

One challenge will be the limited number of places where people can get their hands on a Surface – namely, Microsoft’s retail and temporary holiday pop-up stores.

“I think a lot of people would really like to be able to try out that keyboard before they pull the trigger,” Mainelli said.

Another challenge comes in the number of apps available in the Windows Store, which lags far behind the number for the iPad.

Still, if reports are accurate, it sounds like Microsoft plans to sell a lot of Surfaces.

The Wall Street Journal, citing component suppliers in Asia, reports Microsoft has placed orders to produce 3 million to 5 million Surface tablets in the fourth quarter.

“That’s a big number,” said Mainelli, who notes Amazon shipped 5 million of its Kindle Fire tablet when it launched last year and Google’s Nexus 7 has shipped close to 2 million to date. Apple sold 17 million iPads last quarter.

The challenge Microsoft faces is not necessarily the Surface’s price point, said Michael Gartenberg, an analyst with research firm Gartner.

“We know consumers will spend $499 for something they want,” Gartenberg said. What Microsoft has to do is convince consumers that “this is different. And why different is better.

“This is a huge challenge for Microsoft in terms of not only getting the product right but also the message and the marketing right,” Gartenberg said. “The challenge is directly with the iPad, which is very much perceived by consumers as the base choice. Microsoft has to convince them they’re not buying into the wrong platform.”

There’s another big shadow hanging over Surface: Apple announced last week an event on Tuesday. It’s expected the company will announce a smaller – and presumably cheaper – version of its tablet market-dominating iPad.

Though the Surface aims to be a different tool – more productivity-oriented – than the smaller and less expensive 7-inch tablets such as Kindle Fire and the expected miniature iPad, it still will compete with the companies that produce them.

That’s because the larger battle now is not merely between devices. Those devices are simply ways for consumers to access the large array of services the companies provide and a way for those companies to keep selling services to customers.

“It’s not iPad vs. Surface vs. Nexus,” Gartenberg said. “It’s the Microsoft ecosystem vs. the Google ecosystem vs. the Apple ecosystem.”

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