Rumor: Windows RT Surface could cost $199

Interesting. When it unveiled its Surface tablet in June, Microsoft said the Windows RT version of the device would be priced competitively with “comparable” ARM devices. Whispers from the Far East suggested the tablet could end up costing more than $599.

Now, the guys at Engadget say they’ve got word from an “inside source” that the Surface for Windows RT will actually be priced at $199. Yes, $199, just like the 7-inch Nexus 7 and the Kindle Fire. The information purportedly leaked out of a “session” at the TechReady15 conference where “all the launch details were laid out.”

Now, the Surface is the farthest thing from the Nexus 7 and Kindle Fire. It’s supposed to have a larger, 10-inch display, 32GB of flash storage capacity, and a pre-installed version of Office 2013 Home & Student. Microsoft has touted the device’s “VaporMg” chassis, as well, which it describes as a “combination of material selection and process to mold metal and deposit particles that creates a finish akin to a luxury watch.”

According to an IHS teardown report posted last month, Google’s 16GB Nexus 7 tablet costs $159.25 in parts. IHS expects that, “when additional costs are considered,” Google “at least” breaks even on the device. A similar teardown of Apple’s iPads in March revealed a total production cost of $316.05 for the $499 new iPad and $245.10 for the $399 iPad 2. It’s probably fair to expect the Surface will cost at least as much as the iPad 2 to manufacture, which would suggest that, if Engadget’s source is correct, Microsoft could end up selling the device at a loss.

Perhaps taking a hit on each Surface tablet isn’t an unwise strategy to spur Windows 8 and Windows RT adoption. When HP canned webOS and unloaded its TouchPad tablets at $99 a pop last summer, everyone rushed to pick one up despite the platform’s murky future. By November, NPD Group reported that the device had the second-largest market share in the U.S., just behind the iPad.

At the same time, such a strategy could alienate Microsoft’s hardware partners. Acer chairman JT Wang told DigiTimes last Friday that he hopes Microsoft will reconsider its plan to offer the Surface in the first place. Wang also said Microsoft was “looking for solutions such as creating a price gap to minimize the negative impact on other vendors’ product lineups.” He noted that a $199 price tag would have a “rather significant impact,” while a figure in the $499-599 range would be less harmful to other partners’ efforts.

Comments closed
    • Anarchist
    • 7 years ago

    … will happen only of microsoft have other means to gouge the purchasers to recoup the loss, … like 2 year bondage to their yet to be announced service which will cost $600 over the course of the contract, you now, like smartphones.

      • Xenolith
      • 7 years ago

      This is the only way the RT Surface will sell for $200… if they subsidize with a 2 year contract of some sort.

    • Xenolith
    • 7 years ago

    This is total BS. Microsoft is not going to sell at a loss, because they have nothing to leverage the loss against. As the last paragraph noted, they are not going to alienate their OEM partners by undercutting them.

    Who come up with this stuff? … and why do places like Engadget give these sources any space on their site. Stop and think when “breaking news” occurs.

      • Sahrin
      • 7 years ago

      >Microsoft is not going to sell at a loss, because they have nothing to leverage the loss against.

      Windows App Store

      >they are not going to alienate their OEM partners by undercutting them.

      There are no OEM partners that sell Windows RT tablets right now. They can’t alienate partners that don’t exist.

        • Xenolith
        • 7 years ago

        Windows App Store… no. You can’t leverage against something that essentially doesn’t exist. MS app store will never be a profit generator. That isn’t the goal. In MS space, apps add value to sell Windows. They aren’t going to change strategy for Windows RT.

        S&*% just got real – [url<]http://www.crn.com.au/News/312269,lenovo-outs-windows-rt-tablet-costs.aspx[/url<] Lenova is going to sell an RT tablet for $300. So we are looking at the low end RT Surface going for at least $500.

          • CuttinHobo
          • 7 years ago

          I can’t believe Microsoft is going to charge OEMs [i<]$85[/i<] for the RT license. That already puts their partners' BOMs $85 above the competition. I can go on over to Newegg.com and buy an OEM license for 64-bit Windows 7 Home Premium for $100, and it's a much more capable OS. I'm not suggesting they give it away for free, but I had expected <$40 for RT volume licenses. If Microsoft wants to move a lot of W8 tablets, I don't think they should charge nearly so much for a cut-off-at-the-knees (arrow to the knee, if you prefer) operating system. Keeping the same $300 tablet price point, think of what hardware OEMs could add with an extra, say, $45. For example, iSupply pegs the 16GB Nexus 7's "memory cost" (is that NAND + RAM? I don't see RAM listed separately in the cost breakdown) at $21. So Lenovo could add 32GB of storage - and possibly 2GB of RAM, depending on how inclusive "memory cost" is - and make a mean little tablet. Or spread the savings around on a better screen, a bit more storage, larger battery. Make a high quality device; something to be coveted. It's almost like they want to continue making more money off of Android royalties than from their own mobile offerings.

            • Sahrin
            • 7 years ago

            >I can’t believe Microsoft is going to charge OEMs $85 for the RT license.

            It’s not “the RT license” it’s RT + Office RT. Do you know how much Windows 8 + Office 2013 is going to cost to OEM’s? Way more than $85.

            >That already puts their partners’ BOMs $85 above the competition.

            Well, Microsoft provides integration, hardware, marketing and compatibility testing…so I don’t know that the equation is as simple as you’re making it out to be. (It’s not).

            >If Microsoft wants to move a lot of W8 tablets, I don’t think they should charge nearly so much for a cut-off-at-the-knees (arrow to the knee, if you prefer) operating system.

            I don’t understand where this fallacious idea comes. To get the same software (first party Office apps included) from Apple on a tablet you have to spend $40 – *just for the office apps.* Forget about the OS. The pricing decisions aren’t arbitrary.

            >I’m not suggesting they give it away for free, but I had expected <$40 for RT volume licenses.

            MS is trying ti replicate Apple’s business model. Their price reflects Apple’s pricing structure for the iPad. Obviously Apple doesn’t license OSX, but for a part that costs $245 but retails for $400 this price ($85) makes perfect sense. (Understand that the $245 BOM cost includes the development cost of the software itself, just not it’s “cost to the OEM” because Apple is the OEM).

    • Madman
    • 7 years ago

    I will not be surprised if they will be forced to sell at this price point.

    Remember WinRT is a bare OS, there are no apps, no desktop, nothing. It’s a raw hardware, Metro (which for tablet might be actually good) and that’s it.

    And they want to start fighting with Apple and Android… I don’t think they have snowballs chance in hell at 600$… Then again, fanboys do wonders 🙂

      • Sahrin
      • 7 years ago

      >Remember WinRT is a bare OS, there are no apps, no desktop, nothing.

      Except for Office RT and Windows Music and video?

        • Madman
        • 7 years ago

        Oh, right, typing pages of text is what i REALLY want to do on a tablet. And Windows Music and Video is something unimaginable neither Apple, nor Android has…

        It’s an empty tablet. At least for a few months.

          • Sahrin
          • 7 years ago

          >Oh, right, typing pages of text is what i REALLY want to do on a tablet.

          Apple seems to think so, they sell a doc editor and a presentation program for $10 a piece on iPad.

          >Windows Music and Video is something unimaginable neither Apple, nor Android has…

          Didn’t realize unoriginal = nonexistent.

          >It’s an empty tablet. At least for a few months.

          What exactly is it that you think people buy tablets to do, besides consume content and create/view/edit documents and presentations?

      • moog
      • 7 years ago

      Kettle U Pot = Madman

    • tootercomputer
    • 7 years ago

    The Surface is very cool from what I’ve seen. It will appeal to people. MS is cash-rich and could afford to a loss per unit without breaking a sweat. If they sell those for $199, it will be great for the consumer but totally piss off the OEMs.

    • Decelerate
    • 7 years ago

    I would be very impressed if they release it in the 199$-249$ range. As many have mentioned, the OEMS may take offense, Acer not withstanding.

    A company with the size and current business model such as Microsoft cannot change business models like people change throusers; high-risk, high-gamble shouldn’t be their strategy.

    That would be like Apple licensing out their operating system without a second thought. [i<]Oh wait, that happened, and[/i<]...

    • Visigoth
    • 7 years ago

    Nobody cares if OEM’s are affected, much less a loser such as Acer. If M$ wants to compete on pricing, hell, let them do it! It’s their fu*cking product after all, and I don’t think anybody has anything to say about how they should/shouldn’t price their own products.

    • ronch
    • 7 years ago

    Well, now I know where to spend $200 out of the $300 I wouldn’t buy the Mad Catz keyboard with. Now the only thing left to do is to figure out what to buy with the remaining $100.

    • sschaem
    • 7 years ago

    Those are not like toasters… once MS sale a device they collect 30% of ALL transaction done on the device.. for EVER.

    If this is true, its desperation. You dont sell something that cost $240 to manufacture at $200 if you are a market leader.

    “could alienate Microsoft’s hardware partners”? Toshiba Is the latest to officially state that they are not touching windows RT. Their is no money to be made for them in this app store mafiosi subsidized world.

    MS want it all, just like Apple. “Apple make their on HW , have their own store, they have great margin”
    “Lets stab in the back our developers and OEM so we can be just like Apple !”

      • blastdoor
      • 7 years ago

      Two things:

      1. it’s not “forever”, it’s the life of the device, so maybe 3 years on average.

      2. Unlike an Xbox (which is virtually useless if you don’t buy content), a WindowsRT device with Office and a web browser preinstalled is plenty useful without ever buying a single other piece of content. So selling these things at a loss is a huge risk for MS — quite a few people might buy little to no extra content, and so MS might never recoup the cost of the thing.

    • mcnabney
    • 7 years ago

    I thought the $199 price being thrown around was related to how much Microsoft was going to charge OEMs for the Win8 RT OS+Office?

    • OneArmedScissor
    • 7 years ago

    $199 for this tablet isn’t so far fetched.

    iSupply openly states that they don’t know where some parts come from. Even if they did, they couldn’t know the contract prices that are based on orders in the millions.

    After they projected $245 for the iPad 2, the design was changed yet again, so knock a few dollars off. Now go 6 months out. We’re already looking at $200 territory.

    As recently as the Nexus 7, they were still figuring about $1 per GB of flash.

    Just glancing over retail SSD prices, it’s probably closer to 50 cents per GB. That’s likely a more expensive type of memory than tablets use. Spot prices appear to be less.

    So what’s the margin of error, 100%? It’s a fun game to play, but nothing more. MS is a huge company. They can do a $199 10″ tablet if they want to.

    • pedro
    • 7 years ago

    Fantastic! It should therefore only be around $375 here in Australia then.

    • gmskking
    • 7 years ago

    It’s still made by Microsoft right? No thanks.

      • TO11MTM
      • 7 years ago

      The shame of that is if they still made hardware like they did in the 90s I could probably justifiably call you a troll. The quality of the stuff they put out has gone so downhill; Even their mice have gotten pretty crappy.

        • mcnabney
        • 7 years ago

        Yep. Their mice and keyboards are far worse than Logitech now. And that is saying something.

          • yogibbear
          • 7 years ago

          Does logitech sell an OS? I might have to look into them…

            • indeego
            • 7 years ago

            They tried to sell Google’s OS and it was disastrous for them.

      • albundy
      • 7 years ago

      except for the xbox and its chunky controllers, their other hardware is top notch. it’s a wait and see deal now.

    • elmopuddy
    • 7 years ago

    At $199, I’d buy 2 of them.. interested to see how this plays out.

    • PixelArmy
    • 7 years ago

    Always interested in Surface Pro (depending on price), but sold on the RT at $200 (was/am considering a Nexus 7 depending on how this plays out).

    $200 seems unlikely, but on second look, the guts are very close to the Nexus 7.

    Differences are:
    – Tegra 3 vs Tegra 3+ -> minor amount more
    – More Storage-> minor amount more
    – Bigger but lower DPI screen -> minor amount more (maybe break even)
    – Another camera -> minor amount more
    – Better (?) housing -> can’t guess at $ difference

    This stuff is trivial… Wild guess, I’ll add ~$80 bucks to the nexus 7 costs and end up at the iPad 2 costs ~ $250. Not that big of a loss, especially for MS. And not everything has to have 50% margins.

    • Deanjo
    • 7 years ago

    And here folks is the real reason why MS brought out secureboot. Not for security but everything to do with vendor lock in.

    • [+Duracell-]
    • 7 years ago

    Wouldn’t be the first time they’ve sold hardware at a loss if the rumors are correct. If I remember correctly, the Xbox 360 was sold at a loss initially.

      • khands
      • 7 years ago

      That’s consoles though, the only company I can think of that has successfully launched a console at a profit is Nintendo (and even they had to sell at a loss with the 3DS after the big price cut). Everyone else sell at a loss for as short as they can (benefits in manufacturing, etc. helping bring those down) so they can get the player base up.

      • superjawes
      • 7 years ago

      360 might still be at a loss. It’s been awhile since I looked at that. But the appeal of selling something like the 360 (and Surface, considering derFunkenstein’s theory) is selling the stuff to go with it. MS still gets revenue from XBL and games, so if they pair Surface with a pass for apps/music, they will still make good money, even if the initial hardware sells at a loss.

        • Sahrin
        • 7 years ago

        MS gets 30% of every dollar spent on Surface RT (just like Apple does – even when you buy stuff in-App they get the money), because it’s a closed platform. This is way higher than their license fee for Xbox 360 software and peripherials (remember one of the selling points for Xbox is that the license fee is lower than what Nintendo and to a lesser extent Sony charges).

          • BobbinThreadbare
          • 7 years ago

          Sure but 30% of $1 could easily be less than the license fee for a $60 AAA title.

      • derFunkenstein
      • 7 years ago

      Consoles are a razor+blade strategy. Sell the razor (Xbox) relatively cheap and get money back with every blade (game) sold. You need blades to use the razor, just as you need games to use the Xbox.

        • Sahrin
        • 7 years ago

        And you need content + apps to use the Surface RT. Ever tried to read the WSJ on an iPad? There’s an app for that, and Apple collects 30% off the top. Want to watch Hulu? 30%. Netflix? Games? Zune Music? 30%.

          • derFunkenstein
          • 7 years ago

          At least on iOS and Android, you can certainly get by without spending any money on any apps. There’s plenty to do, plenty to see, and plenty to play on the competing app stores.

        • BobbinThreadbare
        • 7 years ago

        Xbox also somehow convinced people to pay $50 per year for a matchmaking service.

          • derFunkenstein
          • 7 years ago

          I’m just as confused as you are, Kevin.

          • SPOOFE
          • 7 years ago

          [quote<]Xbox also somehow convinced people to pay $50 per year for a matchmaking service.[/quote<] Easy to accomplish when all the "free" matchmaking services suck so badly.

            • derFunkenstein
            • 7 years ago

            there’s no free matchmaking on the Xbox, which is what this little sub-thread is about.

    • Prospero424
    • 7 years ago

    I’m gonna go out on a limb and say that it will definitely cost more than $199. Probably not as high as the $599 figure people were throwing around before, but there’s no way they’re going to hit the $199 price point, even with a subsidy.

      • khands
      • 7 years ago

      I see $499 because if they sell it that cheap they will have a huge partner problem.

        • Sahrin
        • 7 years ago

        What partners? There is no Windows Tablet right now. This is a new product. That’s like saying that releasing the Xbox will threaten MS’s relationship with HP, Dell, etc.

          • Beelzebubba9
          • 7 years ago

          MS has about half a dozen launch partners lined up for Windows RT tablets, and many more on the Windows 8/x86 side of the market. If MS were to actually sell the Surface RT tablet at a loss for $199 without subsidies, I’d imagine they’d lose all of their hardware partners for Windows RT at least.

          That said, I’d buy the hell out of one at $199.

            • SPOOFE
            • 7 years ago

            [quote<]I'd imagine they'd lose all of their hardware partners for Windows RT at least.[/quote<] But most (all?) of their partners have been selling tablets for a little while now and, other than the HP fire sale, none have done particularly impressive. What incentive is there to "support" their "partners" if they're going to perform so dismally? What major blow is it to Microsoft to lose out on such piddly sales numbers if super-low-cost of their 1st-party tablet makes up the difference? There's already plenty of proof that "partners" are superfluous. Witness: Apple.

            • khands
            • 7 years ago

            It’s just not how their business model works, maybe they’re changing models, but pissing them off from the tablet point of view may have them working in Linux a lot more on the desktop. Then again, that’s not such a bad thing… $200 tablets for all!

            • Sahrin
            • 7 years ago

            >It’s just not how their business model works

            What business model? Desktop PC? Yeah, but these aren’t desktop PC’s. They’re closer to consoles – but that’s not quite right either, because they’re more integrated, mobile and general purpose. It’s a unique segment, and will require unique treatment.

            • Chrispy_
            • 7 years ago

            [quote<]There's already plenty of proof that "partners" are superfluous. Witness: Apple.[/quote<] Try telling that to 3DFX 😉

            • Sahrin
            • 7 years ago

            >MS has about half a dozen launch partners lined up for Windows RT tablets,

            Yes, and they all compete with each other. Acer doesn’t seem offended that Lenovo is making WinRT tablets. One extra market entrant. You guys are dramatically overstating a) the importance of OEMs for WinRT and b) the amount of their upset. Believe it or not, being a tier 1 Windows OEM is a license to print money. MS is dependent on the OEMs for exactly nothing because they don’t even manufacture in house anymore (to a large extent). They OEMs are dependent on MS for software, updates and ongoing development. MS also funds a lot of their marketing spend, plus development for hardware through WHQL. The OEM’s are important to MS in that they channel the software to consumers, but MS doesn’t give a shit who stands in that channel (other than that they maximize it) – if Acer wants to pitch a fit then it’ll be fine with them.

            > If MS were to actually sell the Surface RT tablet at a loss for $199 without subsidies, I’d imagine they’d lose all of their hardware partners for Windows RT at least.

            What do you mean “at least”? Do you seriously believe that Acer would take their entire business rogue because they would lose out on a few hundred million dollars on overpriced tablets?

    • Sahrin
    • 7 years ago

    I wouldn’t be too eager to discount the possibility that this is sold at an outright loss. MS’s Xbox business didn’t turn a profit – at all – for something like 5 years from when it was first set up. The total losses were in the high single digit billions – to lose a billion dollars selling Surface RT’s MS would have to sell 8.6 Million of them; that discounts any software sales on top. Apple is a hardware manufacturer and makes zero profit on software (because they don’t sell any for the iPad).

    The loss for a $316 Surface RT is $116 at $200 per unit. That’s in the ballpark (actually probably a bit low) for the loss on the original Xbox, and also for the 360. MS’s license fees on the 360 don’t approach the 30 cents on the dollar it stands to make for every dollar spent on Surface RT content – plus if they think they can really boost the Ex-Zune subscription numbers…I mean look at how aggressive they are being with Windows 8 as a tablet strategy (this is what is illiciting all the vile bitching from TR).

    I’m not saying it’s definitely this way, but I would definitely not count it out. I’ll tell you one thing – it would completely and totally wipe Apple out of the Tablet market. They would be pushed into the same niche they occupy in the PC desktop market – halo customers that have more money than sense.

    And if MS did wipe Apple out of the tablet market, they would easily make back their losses in software sales.

    EDIT: App Store revenue was $1.9B in Q2 – MS’s cut of that (at 30%) would be $570M, or enough to sell 5 Million Surface RT’s per quarter (at a loss of $116 per quarter). That also assumes that MS is paying the same as Apple is, which isn’t necessarily the case (Tegra 3 in the RT, eg, is probably cheaper than the A5x because the GPU is smaller and less capable and nVidia was hungry for design wins before it got picked by Google for the Nexus).

    Do not underestimate Bill Co’s willingness to spend billions of dollars building a business. Sure, they ended Zune and Courier – but they also funded billions for Bing/MSN/Live Search and Xbox (the latter of which became a big profit center). They are still funding Bing to the tunes of low billions in losses per year.

    Also consider that every dollar lost in the Surface group is tax deductible, and MS paid 34% in taxes last year.

      • SPOOFE
      • 7 years ago

      [quote<]MS's Xbox business didn't turn a profit - at all - for something like 5 years from when it was first set up.[/quote<] Wasn't that something that they were up-front about? I recall the original Xbox launch being accompanied by numerous announcements that they didn't expect a profit from the new division for a while. That's the sort of thing you want to be honest to your investors about.

        • yogibbear
        • 7 years ago

        PS1,PS2,PS3,XBOX1,XBOX360,etc. were all originally sold at a loss as they all MAKE money on extra peripherals and GAMES.

          • BobbinThreadbare
          • 7 years ago

          The original Xbox was never profitable actually.

            • derFunkenstein
            • 7 years ago

            And at least so far, I think the same is true of the PS3 life-to-date.

            • BobbinThreadbare
            • 7 years ago

            I wouldn’t be surprised, Cell was a mess.

            • Game_boy
            • 7 years ago

            Worse than that, it’s PlayStation life to date is in the red. They lost money in the first 2 years of PS1 and PS2, and currently with PS3 as well as at the start (look at Sony financials). The few black years of PS1/2/3 aren’t enough to outdo that.

            Meanwhile Nintendo who was “about to exit the console business” according to analysts during Gamecube years has never lost money on hardware or in any financial year until THIS year. They made more money during GC years than Sony did with PS2. 3DS worse fail than Gamecube.

        • Sahrin
        • 7 years ago

        Yes, Bill Gates and the rest of the board knew getting into the console business that it would be a big investment. It’s paid off massively, the Xbox group is a big profit center for the company now and pulls down something like $2B a year in Xbox Live subs alone.

        This is the kind of business model I think they would like for Surface.

      • sschaem
      • 7 years ago

      For the 360, mostly because operation cost, R&D, developer support and marketing cost was taken into account.
      On the HW itself, MS never had a loss.
      Its was a bad business because its profit on the HW alone was so slim, but its almost always like that when you start production of a brand new & complex design.

      And do you guys really believe it cost $50 to build an xbox 360 controller and MS was losing money on that too ? Things are much, much cheaper to build then you might think.

      for 2012 apple should get ~16 billion from the app store and itune combined.
      Thats 4.8 billion in pure profit.
      Microsoft wont get that, I’m guessing just 1/10 of that. so maybe 500 million for the year.

      Thats still enough for MS to sell 12 million tablet with a small profit. The next year half a billion in pure profit, same the year after that, and the year after that.

      MS might be investing 40 to $50 per tablet, but if it doesn’t, windows RT will NEVER be a success.

        • Sahrin
        • 7 years ago

        >On the HW itself, MS never had a loss.

        This is incorrect.

        [url<]http://www.gamespot.com/news/microsoft-taking-126-hit-per-xbox-360-6140383[/url<] >And do you guys really believe it cost $50 to build an xbox 360 controller and MS was losing money on that too ? Things are much, much cheaper to build then you might think. No, as we said they make margins on ancillary sales. For the tablet that's mostly software but includes peripherals. I specifically addressed this point in my post, actually and said they would be counting on it to make profitability at a $200 price point. >Microsoft wont get that, I'm guessing just 1/10 of that. so maybe 500 million for the year. This is a function of market penetration. Apple has 50M iPads (off the top of my head, someone check me) out there, MS will have, at absolutely best possible, 5M in the market at the end of 2012. if they made 500M in CY 2012 they would be thrilled.

      • Forge
      • 7 years ago

      “Apple is a hardware manufacturer and makes zero profit on software (because they don’t sell any for the iPad).”

      Wrong.

      [url<]http://itunes.apple.com/us/app/keynote/id361285480?mt=8[/url<] [url<]http://itunes.apple.com/us/app/pages/id361309726?mt=8[/url<]

        • derFunkenstein
        • 7 years ago

        Don’t forget Numbers for $10 and Garage Band, iMovie, and iPhoto, all of which are $5.

        • Sahrin
        • 7 years ago

        Point taken, I wasn’t aware that they sold apps on the app store.

      • phileasfogg
      • 7 years ago

      Sahrin – if you go back and read Cyril’s cost estimations, he said he thinks it will cost MSFT “at least as much as” an ipad2 to manufacture their 10″ RT tablet. Which means a min cost of $245. So, in your second paragraph, the loss estimate would be a minimum of $45. Let’s just double that number and call it $90. So, although that subsidy is high, it’s better than $116, *if* they sell it at $200. That’s a big *if* – IMHO, they won’t, and shouldn’t sell it below $299. It is a 10 incher after all!

        • Sahrin
        • 7 years ago

        >Sahrin – if you go back and read Cyril’s cost estimations, he said he thinks it will cost MSFT “at least as much as” an ipad2 to manufacture their 10″ RT tablet.

        And iPad 2 cost $245, because the Surface includes the keyboard slip cover and fuding a little for the VaporMg enclosure (versus Apple’s Al) and more expensive insides I went with the cost of the iPad 3 – proceeding under the asusmption that that is a price ‘ceiling’ for the Surface (thus I use $316 as a BOM cost – the reality is the Surface will probably cost less, but there’s no way to know for sure so I went conservative).

        >IMHO, they won’t, and shouldn’t sell it below $299. It is a 10 incher after all!

        I think there’s a strong argument to be made for MS at least subsidizing. The more I think about it, the more sure I am that it’s what they should do. They can’t beat Apple at their own game, but the one flaw in Apple’s revenue model is that it’s non-recurring. Once the music stops and people stop buying the latest iPad, Apple is boned. If MS can parlay a cheap RT tablet into a subscription service for content (like Zune Pass, which rocks by the way) then they can beat Apple on the business side (recurring revenue) and their higher market share will drive app development and revenues.

        To me it’s a win-win, if MS can build a compelling enough offering for something like $19.99 a month, then they’re stupid if they don’t do at least a subsidy.

        The case is a little weaker for a cheap RT tablet, but not cripplingly so. At $200 a unit MS can place absolutely massive volume orders with Tier 1 suppliers (LG/Chei Mei/Panasonic for displays, Samsung/TI/nVidia for CPUs, etc) that will drive costs down substantially below the figures we are tossing around. Apple sells a lot of iPads, but they’ve never placed a 15M unit order for a single quarter (without building it up first). It would be an amazing way to bust into the market, and they could literally save their ad spend. If they really are about “Developers! Developers! Developers! Developers!” this would be an amazing way to prove it. It would also change the tablet market forever.

        So I still think, like you, it’s not the likeliest outcome – but MS would show a colossal about of business savvy by doing it. I think it would lock up the tablet market for them for the next several generations at least.

      • End User
      • 7 years ago

      [quote<]EDIT: App Store revenue was $1.9B in Q2 - MS's cut of that (at 30%) would be $570M[/quote<] MS's cut of that app store revenue would be 0. It's MS's wet dream to have $1.9B in revenue in the first quarter of their app store.

        • Sahrin
        • 7 years ago

        >MS’s cut of that app store revenue would be 0.

        No, 30% of 1.9B is 570M – did the math twice.

        >It’s MS’s wet dream to have $1.9B in revenue in the first quarter of their app store.

        I see wut you did thar.

          • End User
          • 7 years ago

          [quote<]No, 30% of 1.9B is 570M - did the math twice. [/quote<] And this 1.9B is coming from where?

            • Sahrin
            • 7 years ago

            Apple’s quarterly App Store revenues…did you not read my post?

            • sweatshopking
            • 7 years ago

            hahahaha asking eu to understand something simple. Good luck with that!

    • dpaus
    • 7 years ago

    [quote<]which would suggest that, if Engadget's source is correct, Microsoft could be selling the device at a loss. At the same time, such a strategy could alienate Micorsoft's hardware partners[/quote<] Oh, ya think?!? Imagine how HP and Dell will react to that happening? Microsoft is trying a bit too hard to be Apple. Before they go any further, they need to take a hard look at the amount of OS revenue they get from their hardware partners, and compare it to the amount of OS revenue that Apple gets from [i<]their[/i<] hardware partners. Oh, right.

      • Sahrin
      • 7 years ago

      >Oh, ya think?!? Imagine how HP and Dell will react to that happening?

      Well, HP won’t react at all because they aren’t making Windows 8 ARM tablets.

      >Microsoft is trying a bit too hard to be Apple.

      The cheapest iPad sells for twice what this theoretical $200 Surface RT will cost. If they’re trying to emulate Apple, they’re not doing a very good job of it.

        • sschaem
        • 7 years ago

        Why do you think ? Because they know MS need to sale the RT below cost, and for them it doesn’t make any sense.

        Just read not just HP but ALL the other MS OEM… like Toshiba today. they are not going to touch Windows RT at all.

        MS in totaly desparate to do this. Apple is not.

        If MS would sell their RT tablet at $499.. how many do you think they would sale ?

        At $199 MS got a chance… but dont expect the ‘retina’ version or future version to be $199.
        This is a one time sucker punch to grab marketshare. because no developer is going to invest on a platform where Steve & Bill are the only users.

          • phileasfogg
          • 7 years ago

          “on a platform where Steve & Bill are the only users.”

          +100 for that 😉

    • derFunkenstein
    • 7 years ago

    I expect a $199 price to be tied to a subsidy of some sort. Kind of like the $99 Xbox/Kinect bundle that requires 2 years of Xbox Live Gold at the monthly price.

      • superjawes
      • 7 years ago

      That sounds like the most reasonable…$500-$600 would have killed this before it got out the gate, and seeing a swing all the way down to $200 is also pretty odd, but I think Microsoft already has “download whatever you want” subcriptions for music and other stuff. Something like that would let adopters check out the content and justify buying one because it’s “Only $200.”

      • Vulk
      • 7 years ago

      That is one of the more reasonable things I’ve heard in the debate on this one. Thanks Der!

        • derFunkenstein
        • 7 years ago

        I’m here to serve!

          • BiffStroganoffsky
          • 7 years ago

          Where’s my beer!?! …and you are one butch looking wench!

            • derFunkenstein
            • 7 years ago

            I meant serve the insight. As such, I should probably be fired.

      • Sahrin
      • 7 years ago

      Depending on what you are getting in the contract, that could be a great deal. eg, I have a Zune Pass which I happily pay $15/month for (the same as an XBL subscription) – it’s easily worth that and more.

        • derFunkenstein
        • 7 years ago

        Yeah I didn’t mean it as a negative – Zune Pass appears to be a really great deal if you have a device that can play the music back. I’d be all over it with an Android client.

          • Sahrin
          • 7 years ago

          Yeah. I bought one of the last Zune HD’s and I’ve got to say I love it both as a player and access to Zune Pass. Sad to see it go, but as long as the service lives on I’m OK.

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