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Let's assume a Microsoft tablet has really sparked a buyer's interest. It's slim, light and they know exactly which they want, and now it's just a question of the bottom line. Microsoft has to break down every barrier that stops people buying its devices and so it has to be fiercely competitive on price.
Microsoft doesn't need to compete with the cheapest of the cheap — after all, most budget Android tablets aren't a pleasure to use because keeping costs down that low has a knock-on effect on the quality of the hardware — but it does need to be cheaper than its equivalent rivals like the iPad or Galaxy Tab family.
If Microsoft want to make a splash in the tablet market, it needs to sell millions of devices to build the critical mass that will generate the ecosystem that it needs. Pricing competitively can help it shift those units — and if Microsoft has to subsidise every single tablet it sells to convince consumers to buy, it shouldn't be shy of doing so.
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