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Is Microsoft's Price Model For the Surface Justifiable? 417

Posted by Soulskill
from the solid-color-rectangles-are-pricy dept.
colinneagle writes "A blog post contending that Microsoft's decision to match Apple's iPad pricing on its Surface tablet will hurt its chances in the market has brought out some negative comments from readers who seem to like the Surface tablet. I was kind of surprised by this, as I and other bloggers seem to agree that making the fully keyboard-equipped Surface tablet roughly $120 more expensive than the iPad kind of negates the purpose — to build steam by appealing to those in the market for a cheaper tablet. Also, I've yet to see an argument that justifies pricing the Surface competitively with the iPad, so I figured I would bring the question to Slashdot: Is Microsoft's pricing for the Surface tablet justified?"
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Is Microsoft's Price Model For the Surface Justifiable?

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  • Justified? (Score:5, Insightful)

    by dhavleak (912889) on Wednesday October 17, 2012 @05:34PM (#41686561)

    "Is it priced smartly?" is probably a better question. What could be 'just' or 'unjust' about Surface pricing?

  • Supply and Demand (Score:5, Insightful)

    by ADRA (37398) on Wednesday October 17, 2012 @05:35PM (#41686571)

    If there are enough people willing to throw a ton of money at a product then they're doing a good job pricing their products. Nobody asks if Apple products are expensive. They sell like crazy so the price works. If anything, Apple should charge more for their products until they've maximized their profit supply curve (they've probably extrapolated this already).

    All this said, do I think that Microsoft has a hope in hell selling to the niche high en crowd? No, but that being said, I thought the Xbox was a boondoggle as well, and look where that got them.

  • Reality Bytes (Score:3, Insightful)

    by Tablizer (95088) on Wednesday October 17, 2012 @05:35PM (#41686573) Homepage Journal

    PHB's sometimes need to be bopped over the head with the harsh reality of very poor sales before they admit they are not the center of the universe.

  • Yes, but... (Score:3, Insightful)

    by WhipItGood (679579) on Wednesday October 17, 2012 @05:35PM (#41686579)

    They can probably justify it, but I won't pay it. If they beat the iPad by $100 or included the keyboard at the same price, maybe.

  • Who cares? (Score:3, Insightful)

    by RocketRabbit (830691) on Wednesday October 17, 2012 @05:36PM (#41686587)

    The purpose of Surface is not to sell, it's to convince MS's investors that they are keeping up with the rest of the market. I don't think anybody seriously thinks it is a competitor to the iPad, or even to the Droid-based iPad knockoffs out there. It's just this thing, you know?

  • -1 Flamebait (Score:5, Insightful)

    by metrometro (1092237) on Wednesday October 17, 2012 @05:37PM (#41686599)

    You're asking Slashdot for a Apple vs Microsoft comparison on a product none of us have used? Well that's surely going to be reasonable and fact based discussion.

  • by Anonymous Coward on Wednesday October 17, 2012 @05:42PM (#41686653)

    Yeah, how do you pretend to compete with a 2048x1536 retina display using 1366x768? It's 1/3rd fo the pixels.

    The New iPad is a comfortable desktop machine in a portable package. The Surface is a Me Too tablet.

    If their pricing was in line to compete with the Nexus 7... Then we'd have a competition....

  • by Anonymous Coward on Wednesday October 17, 2012 @05:42PM (#41686657)

    using the word justified seems to take away from the fact that there was a cost to develop and build it. Wouldn't we have to know those costs before we can say "justified"? How about asking is it worth it instead?

  • by steveha (103154) on Wednesday October 17, 2012 @05:48PM (#41686739) Homepage

    "The price of a thing is what the thing will bring." You can set a price anywhere you want, but it is up to the customers to decide whether they are willing to pay the price.

    So, now, who wants a Surface? How does Surface fit in to the tablet market?

    Apple made the first non-sucky tablet, and they reaped huge first-mover advantage, which is still paying off for them today. Related, they have network effect: everyone made apps for iPad because all the customers bought iPads, and customers bought iPads (in part) because of the rich selection of apps. Additionally, Apple did a great job on the user experience, and the quality is excellent. So you put all this together and Apple can command a premium price.

    Along comes Android. Now you can get quite nice tablets for $200, and you can install any application you like. You can use multiple app stores if you like. So Android is both the low-cost solution and the more-free solution.

    Along comes Microsoft. They are very, very late to the party. First mover advantage? Definitely not. Network effect, vast library of apps? No; they need to build a new stable of C# Windows 8 apps, from scratch. More-free? No; they are copying the Apple model, where the customer must go to the official app store. (And Microsoft is also copying the idea of raking a 30% commission on each sale. App developers tolerate this of Apple... will they tolerate it of Microsoft?)

    So... low-cost? Definitely not. The Surface is being priced like an iPad. Customers are willing to pay a premium price for an iPad, but I cannot see any reason why customers would see enough value in a Surface to justify a premium price.

    IMHO, Microsoft's best bet is to make the Surface integrate very smoothly into a Windows network. It should connect smoothly to Windows servers, it should have a good email client that can talk to Exchange servers, that sort of thing. That can carve out a niche in the business market, where incidentally a higher price doesn't hurt so much. But they are so late to the party, that many companies are already standardized on iPad. (And all the C-level executives want iPads and already have them.)

    In short, at this price level, the Surface will be a niche product at best, and very possibly the next Zune.

    steveha

  • This is why techies tend to be crap at marketing (that's a complement to techies by the way, I'm a techie).

    The purpose of the Surface isn't just to make a profit on each unit (which at this price it probably is), it's to help position Windows 8/RT/Metro or whatever it's called.

    The market for cheap tablets is thoroughly occupied by Android. Most people I know, even techies, think of Android tablets as "like an iPad, but cheaper, and therefore not as good". The perception (right or wrong) is that if you want the best you buy an iPad, if you want cheap and cheerful you by an Android tablet. There is no competition at the premium end, it's iPad or nothing. The perception is that the only reason you'd buy Android is because you don't have the money for an iPad.

    Pricing the Surface at the same point as the iPad sends out a message to consumers that says "we think the Surface is as good as the iPad". Microsoft clearly want to position Windows 8/RT on tablets as a premium product, it doesn't want to compete with Android, it wants to compete with Apple and iOS.

    That won't stop other manufacturers from making cheaper tablets, but Microsoft are setting the bar high. If someone else (e.g. Acer) make a cheap WinRT tablet it will be seen as an affordable version of a premium product, not a "cheap" product.

  • Re:Doesn't matter (Score:4, Insightful)

    by 0123456 (636235) on Wednesday October 17, 2012 @05:55PM (#41686831)

    People run Windows because it does what they want to do and they're happy enough with it.

    They run Windows because a Mac costs 2.5x as much and they have a load of old Windows software they can't live without.

    In this case the 'Mac' tablet costs about the same as the Windows tablet, and their old Windows software won't run, so why would they buy one?

  • by PolygamousRanchKid (1290638) on Wednesday October 17, 2012 @06:07PM (#41686955)

    Nobody asks if Apple products are expensive.

    Expensive stuff is better than cheap stuff, right? Maybe the price is for the Bling effect?

    Oh, is that a cheap Surface that you have there?

    No, it is more expensive than your iPad!"

    Most folks ordering expensive champagne can't taste the difference between Moet Chandon and Purple Drank, but the champagne must be better, because it is more expensive, right . . . ?

  • Re:Doesn't matter (Score:5, Insightful)

    by MaWeiTao (908546) on Wednesday October 17, 2012 @06:21PM (#41687131)

    People bitch about Office, but despite the alternatives no one switches. This isn't like Adobe products where there are no viable alternatives. Several years ago my company did try iWork. That experiment lasted roughly a year. It wasn't that it was bad, but it wasn't any better than Office and in some ways less robust.

    My current company is currently a 90% Mac environment. We've had our computers roughly 8 months and in that time 3 of the 7 Macbooks we own have already had some kind of hardware issue. One wouldn't charge and the other two were USB related. On a more general level I hear people complaining about the OSX environment just as much as I've heard people complain about Windows in the past. I'm not suggesting Apple products are bad per se. My point is that when you're working with them on a daily basis they're not fundamentally better than anything else.

    What hurt Microsoft wasn't the quality of their products per se, it was public perception. Without question Windows 95 through 98 had problems. But those were also operating systems in there relative infancy when computing environments were evolving at a rapid pace. OS9 was an unstable mess, from my experience more crash prone than anything from MS. OSX was a big improvement, but it wasn't perfect and took quite a few years to get good.

    But going back to Office, it would have gone the way of Lotus Notes if it were as bad as people like to claim. I use OpenOffice at home, and while I think it's pretty good I don't think it's yet on par with Office.

  • Overpriced... (Score:4, Insightful)

    by Bert64 (520050) <bert@@@slashdot...firenzee...com> on Wednesday October 17, 2012 @06:27PM (#41687189) Homepage

    Companies produced Android tablets which competed with the ipad on price, they didn't sell...
    Windows RT is mostly in the same boat, it is a new entrant to the tablet market but is known in other market segments and has relatively few tablet specific apps.

    MS are hoping that the windows brand will sell tablets and encourage developers to make apps, however it may just do the opposite... people tolerate windows on the desktop largely because its already ubiquitous, but they are unlikely to put up with it on a tablet when the ipad is the benchmark.

    I also suspect that the windows brand will backfire in other ways, users will buy it expecting to run their existing software and then be disappointed when they can't...

  • Re:Yes. (Score:1, Insightful)

    by scot4875 (542869) on Wednesday October 17, 2012 @06:42PM (#41687299) Homepage

    I can still run the newest version of Visual Studio on XP -- a decade-old OS.

    The latest XCode, however, won't run on my 2-year-old quad-core MacBook Pro.

    Fuck Apple and their updates. I'll happily take the Microsoft model of a larger upgrade every 8 years, with regular service packs during that time, vs the Apple forced upgrade march.

    --Jeremy

  • Re:Doesn't matter (Score:4, Insightful)

    by war4peace (1628283) on Wednesday October 17, 2012 @06:53PM (#41687401)

    Generally, people like Microsoft software products.

    There, fixed that for you.

    Look, I know it's a wet dream to say that people don't like Microsoft products. It's what you wish for and in your mind it's probably true. Sadly, all world data proves you wrong. Market share, corporate apps, etc., all show Microsoft-based stuff comes first in preferences. It's the way it is.
    If you meant hardware, then yes, save for XBox there's been nothing that Microsoft made right so far.
    Now let me interpret your "forced down their throats at the work place". You're putting the cart before the mule, so to speak. It goes like this: Software that only runs on Windows came to life because there was a larger demand for it to run under Windows. The demand existed BEFORE the product was made. if I start to make an application, a piece of software that I want to sell, I look at market size. Which platform offers the greatest chance for ROI? Which OS do my possible customers use? That's what I create my software for. then, if it sells fine and if I make enough money to invest some with almost no chance for ROI, I'll make a Linux version too, just for the fun of it or whatever. but corporate software has been primarily created to fatten wallets, and wallets can be genuinely fattened if you have Windows-based customers. Sad but true. I mean, when was the last time you actually BOUGHT an application for your Linux-based PC?

  • by mdfst13 (664665) on Wednesday October 17, 2012 @06:54PM (#41687411)

    Another issue is that Microsoft wants to sell software not tablets. If they sell the premium, expensive tablet, that leaves plenty of room for their customers (who are computer builders) to sell cheaper versions or even their own premium versions. If they sold their tablets as cheaply as possible, it would be much harder to sell software to their normal customers. That might push their customers to Android, which is exactly what they want to avoid.

    Apple is a consumer company. They sell direct to ordinary people. Microsoft is not (at least not primarily). They sell to businesses. It may make sense for Microsoft to enter the consumer market here, as Apple has been the only ones selling their own solution for both the software and the hardware. This allows Microsoft to compete with both Apple and Android. It would not make sense for Microsoft to only sell integrated solutions, as their main strength is selling to builders (the Android space).

  • Re:Yes. (Score:3, Insightful)

    by cheesybagel (670288) on Wednesday October 17, 2012 @07:01PM (#41687477)
    I think MS is doing great with its pricing model. This way Android can dominate the tablet market like its meant to.
  • Re:Yes. (Score:4, Insightful)

    by cbhacking (979169) <been_out_cruising-slashdot&yahoo,com> on Wednesday October 17, 2012 @07:25PM (#41687711) Homepage Journal

    Given that the GP started out talking about XP (an OS, not a hardware platform), I'm guessing the complaint is that Xcode 4.5 won't run on a two-year-old version of OS X.

    I'll grant that OS X upgrades tend to be quite cheap, but they have atrocious forward compatibility; you *have* to upgrade to keep running modern software.

  • Re:Yes. (Score:4, Insightful)

    by mosb1000 (710161) <mosb1000@mac.com> on Wednesday October 17, 2012 @07:38PM (#41687799)

    There are ac couple reasons you can't make a direct comparison like this. For starters, Apple releases new versions three times as often, but they each cost much less. Overall, if you want to stay up-to-date the costs are similar.

    Apples strategy brings smaller changes to the market more frequently. While there are a small number of arithmetically challenged users who view this is overly expensive, the adoption is actually much easier because the individual changes are smaller and cost less. That means people are less likely to resent and skip entire upgrades (like Windows Vista) because they aren't expected to learn an entirely new set of features with each new upgrade.

    In essence, Apple is asking people to take three small steps while MS expects them to be willing to climb one large step.

    Also, Apple doesn't sell upgrades, they sell the actual OS for $20. So if you don't want to pay three times as much, you can skip as many upgrades as you want and the cost to get the latest version remains the same.

  • Re:Yes. (Score:5, Insightful)

    by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Wednesday October 17, 2012 @10:53PM (#41689067) Homepage Journal

    If you want to try to do a more direct comparison, the Win 7 -> Win 8 period for that $70 upgrade encompasses OS X 10.6 ->10.8 for a combined price of $79.

    ...per household. The Mountain Lion upgrade was $20 and applied to every compatible computer you own [apple.com].

  • Re:Yes. (Score:3, Insightful)

    by Gregg Alan (8487) on Wednesday October 17, 2012 @11:17PM (#41689223)

    Two year old quad-core MacBook Pro?

    Really? I thought Apple Notebooks didn't get quad-core i7s until the most recent refresh. (Or the second most recent refresh). Was that really two years ago?

    -OR-

    Are you reporting a dual-core chip with hyper-threading as a quad-core? It's a common mistake that Apple users stereotypically make.

    -OR-

    Intel offered quad-core i3/i5 processors and I'm simply unaware.

    -BUT-

    Please let me know which CPU you have. I want to be better informed.

  • by shutdown -p now (807394) on Thursday October 18, 2012 @01:22AM (#41689811) Journal

    There may be many things to like about iPad, but it's certainly not a "comfortable desktop machine".

    (not that I think Surface would be, either, but it's a bit closer to that)

  • by gig (78408) on Thursday October 18, 2012 @06:00AM (#41690741)

    The Surface with keyboard is $599. And you need the keyboard because the office suite has not been fully updated for touch like the iPad office suite.

    iPad starts at $399, and in less than one week, we expect a new model at $299.

    There is nothing in the Surface lineup to match the screen on the iPad with Retina Display. So Microsoft is competing with the $299/$399 iPads, not the $499 iPad.

    And iPad has about 500,000 apps, 250,000 of which are full-size, and over 100,000 hardware accessories. And the whole iTunes media ecosystem. Microsoft has 4000 apps for Surface RT, and their music store is relaunching again, for the 4th or 5th time this century.

    And Apple has like 35 years of making consumer computers. On October 27th, Microsoft will have one (1) day of experience making consumer computers.

    But wait, Surface RT has a cut-down version of the mouse-driven Microsoft Office. For $45, you can put Keynote, Pages, Numbers, iMovie, iPhoto, and GarageBand on your iPad, and that is going to enable you to produce a 2 minute marketing video for YouTube, which is a 21st century task, not just make a Word document, which is a 1985 task. And even with that $45 of software, that only makes an iPad Air into a $344 device, and iPad 2 would be $444.

    So Surface has a lot of disadvantages against Apple.

    And then back to the pricing, what does $599 buy you?

    - $599 at Microsoft — 1 Surface RT with touch cover

    - $599 at Apple — 1 iPad Air, 1 iPhone (or iPod touch,) 1 iPod shuffle, Keynote, Pages, Numbers, iMovie, iPhoto, GarageBand, and almost enough left over to get cases for everything

    - $599 at Apple — 2 iPad Airs and a dollar change

    - $599 at Apple — iPad with Retina Display, Wireless Keyboard, Keynote, Pages, Numbers

      and Surface is only at all 5 Microsoft Stores. The Apple gear is at hundreds of Apple Stores and other stores.

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