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Is Microsoft's Price Model For the Surface Justifiable?
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?"
"Is it priced smartly?" is probably a better question. What could be 'just' or 'unjust' about Surface pricing?
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.
Bye!
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.
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?
"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
lf(1): it's like ls(1) but sorts filenames by extension, tersely
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.
Paul Leader
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?
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.
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.
Dewey, what part of this looks like authorities should be involved?