Microsoft CEO talks Surface pricing, hints at iPad competition

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.