Microsoft CEO talks Surface pricing, hints at iPad competition

Microsoft CEO talks Surface pricing, hints at iPad competition

Summary: The software giant's chief executive hinted in an interview that the Surface tablet would be priced right at the "sweet spot" between low-end tablets and Apple's iPad, the current tablet market leader.

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Microsoft chief executive Steve Ballmer has all but poured cold water on a $199 price tag for the long-awaited Surface tablet, set to debut alongside Windows 8 next month.

In an interview with The Seattle Times, Ballmer hinted at the tablets pricing without going too overboard with detail. He said while Microsoft has a "very competitive product from the features perspective" with the forthcoming tablet, the software giant has yet to settle on a price for the Surface.

"If you look at the bulk of the PC market, it would run between, say, probably $300 to about $700 or $800," he said in the interview with the newspaper. "That's the sweet spot."

While that estimate pegs the tablet to be in-or-around the $500 price range, the chances of a price tag at the lower-end of the scale seems unlikely. The Microsoft boss hit out at lower-priced tablets, claiming that, "they do less," but noted that Apple's iPad may have set the benchmark for the price of the firm's tablet.

He explained:

I think most people would tell you that the iPad is not a superexpensive device. ... (When) people offer cheaper, they do less. They look less good, they're chintzier, they're cheaper.

If you say to somebody, would you use one of the 7-inch tablets, would somebody ever use a Kindle (Kindle Fire, $199) to do their homework? The answer is no; you never would. It's just not a good enough product. It doesn't mean you might not read a book on it....

The dilemma for Microsoft is relatively simple: How can Microsoft target the right audience -- primarily business professionals and bulk-purchasing enterprises -- with a plug-and-play Windows device that will run with existing Windows networks, and still fend off the iPad as its main rival in the tablet space?

The iPad ranges between $399 for the non-Retina display iPad 2, and all the way up to $829 for the top-end iPad 3; Ballmer's comments are clearly directed at the Cupertino, CA.-based technology giant. 

Another concern is keeping Microsoft's competitive edge in the hardware-building business without upsetting (too much) its partners in the PC and tablet building space. 

ZDNet's Adrian Kingsley-Hughes previously noted that the Surface could be heavily subsidized, just as smartphones are in the U.S. market, but it's a risky move that could further anger competing tablet makers offering Windows RT, the ARM processor-based version of Windows 8.

Microsoft already noted the "risks" involved in launching its own tablet, its hardware and tablet partners notwithstanding. Acer's chairman has already been fairly vocal on the matter. J.T. Wang fired off a warning shot at Microsoft, calling on the software giant to "think twice," over its plans to launch the Surface tablet. 

Ballmer said on July 9 at the Worldwide Partner Conference that Microsoft plans to sell "a few million Surface PCs" in the coming year, according to ZDNet's Mary Jo Foley.

Topics: Microsoft, Enterprise Software, Mobility, Tablets

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29 comments
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  • $300-400 Win RT and $700-800 Win 8 x86 tablets

    The $700-800 x86 tablet may get some (but not much)
    traction, but faces competition from ultrabooks.

    The $400 RT tablet looks doomed, at $300 it may
    have a small chance.

    Looks like MS is trying to set up a price umbrella for
    its hardware partners, without overtly saying so.
    Either that, or it's being unbelievably arrogant and
    will get its comuppance shortly. It's claim of selling
    a few million units will be more like a few hundred thousand.

    Microsoft is as reticent about Surface pricing as Mitt
    Romney is about tax returns. The difference is MS will
    have to tell all starting next monh.
    rosanlo
  • Too Little, Too Late, As Usual

    Still too focused on Apple, as usual. Even as the Nexus 7 is shifting the market towards smaller, cheaper devices. Just like they were too focused on the Iphone when developing Windows Phone 7, even as Android was shifting the market towards higher-resolution screens and multiple cores.

    I predicted at the time they were announced that the Surface devices would be overpriced and underpowered. Looks like I was right.
    ldo17
    • RE: overpriced and underpowered.

      Sounds like Steve Bal[d]mer.
      Arm A. Geddon
  • office and keyboard cover make huge difference

    Its day 1 buy for me, even if expensive than iPad.

    The UI is also great, make others look like outdated toys
    ninjacut
    • UI Outdated?

      What a strawman argument but keep telling yourself that you might believe it. And tell that to the 40% that still use XP.

      p.s. Hey Microsoft drone...

      DEFEND THE HIVE!! DEFEND THE HIVE!!
      Arm A. Geddon
      • I use it daily, so dont have any issue in telling all Windows users

        This is must upgrade for all Windows, including XP. My oldest laptop is 5 years old, a Centrino machine and it runs just fine.

        And I don't have to defend Microsoft, just few % of existing Windows users are sufficient for Windows 8 to be successful. You can stay away from it, as you probably are.
        ninjacut
      • Do you understand what 'strawman argument' means?

        A strawman argument is when you construct a fictional or unrelated premise - then argue against that premise since it's easier to defeat.

        Ninjacut makes NO strawman arguments. He simply states a preference in the form of an opinion: that he feels the new Metro UI makes iOS' UI look dated. He's not the only person to make that claim. Quite a few UX/UI designers have said the same thing.

        YOU, on the other hand, have engaged in what's known as an 'ad hominum' argument wherein the challenger (you), unable to propose a coherent challenge to the actual statement, attacks the other person and their character without any factual basis.

        It's a tactic that's commonly used by children and the mentally deficient.

        (PS: That was also an ad hominum argument - just done with far more grace and tact than you... :) )
        TheWerewolf
        • RE: grace and tact

          I see you have neither. Call me whatever you want. It wouldn't and won't be the last time someone has. Btw, so I was quick to throw that "strawman" reply out but Ninjacut has done it before. And I'm sure with your iHate you have thrown out "strawman" arguments before too.
          Arm A. Geddon
    • One more thing...

      http://twicsy.com/i/Vjtczb

      Too F'N funny!!
      Arm A. Geddon
  • Off topic. About wizard57m-cnet. This guy is a moderator?

    What a joke!! Taken from 2 posts from the article:

    Seven reasons to buy the Nokia Lumia 920

    What are you ranting about???

    "Did all the Windows Phone 7 Lumias suddenly quit working? Oh jeez, does that
    mean my WinMo5 device no longer works? Congratulations, you just won the
    Stupid Post award...this award is coveted by a large majority of the posters at
    ZDNet, and it takes quite a bit of idiocy to win!"

    "Eat your own dog food, chmun77...

    don't change the subject...to quote MrSmith317 (just to help you stay with me!)
    " Honestly I can't see why anyone would buy a product from a company that left early Lumia adopters out to dry like that...3 months without a working phone???"

    See that? "3 months without a working phone???" YES, that is what he said!!
    I still find it incredulous...however, I'll give you "Miss Congeniality" award for
    the attempt to sidetrack the thread."

    WOW ZDNet these are the kind of people you use to moderate. I hope you don't pay them!!

    wizard57m-cnet profile:

    http://www.techrepublic.com/members/profile/6268348
    Arm A. Geddon
    • Yes, I am a moderator...

      That's why I ask people to keep the discussions civil. Being a moderator, however,
      does not preclude one from having an opinion, and being able to voice that opinion.
      As for "pay", no, it is strictly on a volunteer basis.
      Nice try at an "ad hominem" attack on someone you don't even know...my skin is
      thick, so your personal, unprovoked comments don't bother me...in fact, I'm flattered
      you felt the need to actually search out my profile at Tech Republic! Thank you!
      wizard57m-cnet
      • You're two faced!!

        You say one thing and do something else. Sorry you win the loser of the day award!!
        Arm A. Geddon
      • RE: attack on someone you don't even know

        Don't you just do that with others you reply to. Loser!!
        Arm A. Geddon
        • Apple fanbois

          You stay classy.
          toddbottom3
          • Classy?

            Sorry, that's the moderator's job. You? Couldn't care less!!
            Arm A. Geddon
          • Cut it out!

            All of you. Moderators are here to try and keep the content civil -- which as you know, doesn't happen very often any more -- particularly on posts that are 'high target' such as Apple, Microsoft, Google etc., so please all take a breather.
            zwhittaker
  • What About My Xbox?

    When you think about it, nearly all the questions have been answered, except price. Windows 8 is a solid platform with promise (see Nokia 920), and will be a viable competitor for Android in the near future. But what I really want to know is how well Windows 8 will integrate with my Xbox. And specifically I want 3 things

    Device Mirroring: I'm not sure what its called, but using the Xbox to mirror the screen of your Windows 8 phone or tablet to a TV I think is a necessity. I believe Apple does it with Apple TV, except Apple doesn't have the 40 million consoles footprint that Microsoft does.

    Cloud gaming: A feature for the Surface Pro: being able to play games downloaded by your Xbox through the cloud. Cloud based games is a feature Microsoft has been trying to push, this is a perfect opportunity for Microsoft to capitalize

    Return of Windows Media Center with the cloud. I'm not sure if Microsoft has any sort of cloud based sharing system, but if they don't utilizing the nearly forgotten Windows Media Center is a good place to start.

    Overall, I'm just really interested in how they tie the Xbox into all this. Personally, I think Microsoft should've released only one tablet. Running on a soon to be outdated ARM chip (Tegra 3) is making more problems than its solving (price, functionality, additional competitors). A 32 gb Surface Pro at 499 would've been enough for me, with a 120 gig with 4g at 849. Just my 2 cents
    Fat Albert 1
  • I think what Microsoft is trying to do is...

    I think they are trying to price it now too low because if they do that, people will not take it seriously and think it a cheap piece of metal (which you think it is, then get a brain). So they price it higher, closer to the iPad, so people will think that it is high quality (and if you got that brain yet, you will know the iPad is hugely overpriced). We'll see if this is the strategy and if it'll work out.
    Jabe124
  • $200, $300, ...

    RT Version:

    $ 200 I buy it in a second; no brainer.
    $ 300 I will need to rationalize that it comes with Office and that the UI is significantly more advanced than Android or IOS. May still buy it.

    Anything more than $300 : Will need to wait and see that the hardware is solid based on reviews and user experience, and likely will need to wait and see that there are better apps coming about than the total junk that's mostly in the Win 8 Store now.
    Han CNX
    • What galls me about the entire discussion is the weird double standard.

      The iPad at $499 is a middle of the road device (with the exception of its screen resolution). It's short on storage. Short on memory... if it were made by anyone but Apple, most pundits would be lambasting it for all the 'short cuts' they took to get the price down.

      So, when Asus comes out with the Transformer Infinity at the same price, but with more internal storage and the ability to transform into an 'android laptop', making it one of the most effective tablets around for serious productivity work - I mean the thing can take NTFS external hard drives for pete's sake - it's ok - but too expensive.

      When Samsung released the Note 10.1 - which has an active digital pen, making it one of the best tablets for note taking, sketching and art *creation* not just consumption.. at EXACTLY the same price, but with a lighter thinner chassis - too expensive - not good enough.

      In fact, a WinRT tablet with 16GB of storage is almost *exactly* comparable to an iPad with 16GB except for the screen resolution. So, at $400 it is definitely better. Yet, for some weird reason, we're hearing - must be $200. Which is insane.

      In the end, the simple reality is that the consumers have collectively lost their minds. Or at least the ones on tech blogs have.

      Then again, everyone kept saying no one could beat the iPhone... So maybe there's still hope that the consumers who AREN'T on tech blogs will be saner and buy on rationale other than 'does it have an Apple logo on it...'
      TheWerewolf