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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?"
As we've seen time and time again, people are simply willing to pay more for Microsoft products than Apple products.
There's no -1 for "I don't get it."
Nuff said
Then yes, it's worth an extra buck-twenty. What good is a cheaper device that I can't do my work on? That's just a toy.
What does it cost them to build per unit, what's the R&D costs and what profit margin do they want?
The problem with the PC industry is that a lot of OEMs went super cheap, with razor thin margins. Making it up in software bundles and volume. This is not sustainable. Hopefully Microsoft got the message and pricing within their costs.
Non impediti ratione cogitationus.
"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!
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.
Table-ized A.I.
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.
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?
I find the device lacking in the screen department. It is a low res 720P screen with 16:9 AR. It's not a good device to use as a reader or to create any content due to this. If the device clearly outclassed the iPad then it might be worth it to me at 500 with the keyboard. Now it looks like a me too device only with a lower quality overall.
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.
Everyone keeps talking about the iPad price as if that's the holiday price. Apple have a special event on the 23rd (i.e. in six days) where they're releasing 24 new variants on the iPad. At *this* point we'll be able to see how the iPad and Surface offerings stack up against each other
I understood this to be the ARM device that _cannot_ run Windows applications (only Metro apps).
No, Surface runs WinRT, the ARM version of Windows 8 which will only Metro apps which don't take advantage of native x86 code.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
"it is what is forced down their throats at the work place" -- agreed - to a certain extent. I'm required to use it because some of my work-related programs only work on that platform. If someone wants to port Adobe Acrobat Pro to Linux, I'll be the first in line. I'm one of the few who has written and maintained steps for running it under Wine over the years to force it to somewhat run on Linux, but it's still missing numerous deal-breaker features when run in that manner. I could refuse to use Windows. I just wouldn't be able to get all my work done.
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 Surface Pro is supposed to be a full-blown PC, capable of running software that runs on Windows 7, from what I've been reading.
"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
iPad 16GB no keyboard -- $499
Surface 32GB no keyboard -- $499
Advantage Surface
iPad 32GB no keyboard -- $599
Surface 32GB with touch keyboard -- $599
Advantage Surface
iPad 64GB no keyboard -- $699
Surface 64GB with touch keyboard -- $699
And the released Surface includes Office 2013RT.
Advantage Surface
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?
Microsoft is acting like they number one in the mobile market, but the fact is they're not even in the game yet or even a player in the sub-mobile markets and they're making some huge mistakes. I've been a .NET developer for 16 years and I'm seriously pulling for them, but the last 6 months have been full of Microsoft making ridiculous decisions. I almost think that Google and Apple paid top executives at Microsoft to screw up this Windows Phone 8 launch as badly as humanly possible.
Microsoft refuses to release the beta or alpha of the Windows Phone 8 SDK to developers unless they pay a $99 fee and even then the SDK is released on a lottery basis. Come on, seriously? MS needs people to write software for for WP8 NOW, not later. So at the very least if they're going to act like they're relevant and charge developers $99 for the privilege to write software for their currently-non-existant device with 0% market share they should at least give those developers the SDK... which leads to my next complaint:
$99 to develop for a device with 0% market share? Microsoft, are you joking? You should be begging developers to write software for WP8 and maybe een giving them a full copy of VS 2012, bot charging them $99. Big mistake.
The Nokia Lumia 900 is a heavy brick. Cool specs and everything, but it's a brick.
And lastly...
Nokia gave AT&T exclusive rights to provide cellular service to the Lumia 900. Is this a joke? Every other mobile maker is going away from exclusivity. Maybe MS could get away with this is WP8 and the Lumia 900 were some world-changing revolutionary device, but come on. WP8 is cool, it's got some great stuff, but it's not anywhere near the same as when Apple released the iPHone in 1997 and gave AT&T exclusivity.
Microsoft has some great stuff going for it: an awesome Visual Studio IDE that blows away XCode and Eclipse and they have a huge foothold in the business market. Tons of businesses have invested heavily is MS infrastructure and developer talent and would be much more likely to do mobile dev projects if Microsoft could get their mobile strategy even 1/2 right.
But as a developer with a passion for mobile dev I'm obviously pretty discouraged about their mobile strategy in the immediate future right now.
The people saying the surface has to undercut the ipad are missing the point... Microsoft's strategy is to anchor a higher price for windows rt tablets...
So the oems can undercut the price without being over their own costs...(Which they would pressure microsoft about...)
How many vendors provide Windows based tablets? ... One
Asus, Acer, Fujitsu, Panasonic, HP, Lenovo, and now Microsoft.
Looks like 7 and counting. Asus in particular offers x86 Windows tablets near iPad prices already.
"His name was James Damore."
iPad 16GB no keyboard - $399. Surface does not have retina display.
Let's say you're hired somewhere that buys a new laptop for every new hire. Your choices are any off-the-shelf (not custom) laptop from Apple, Dell, HP, or Lenovo. Which would you choose?
Under these exact conditions with people from a mix of STEM disciplines, more than half will choose the MacBook. Over 90% of the software engineers choose Apple. The fact none of their software is specifically Windows-based probably helps, but it is an interesting situation and result. If I were in that situation (dream job - I'm a bit jealous of my friend that works there), I'd pick the Apple, too.
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.
"when Apple released the iPHone in 1997"
Ballmer's lost decade is messing with your measure of time.
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...
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
I think VMware has helped this a lot too.
Need Windows? Spin up a VM or 3, whatever OS your company has licensed. Build your software, run your CAD program, etc. Delete it when done, build a template, whatever.
Use the Mac for your stuff, including RDPing to your vCenter.
There are two types of people in the world: Those who crave closure
I don't want to be horrible, but I think you are thinking like a techie :-) (actually you will probably like that :-)
The perception is that the only reason you'd buy Android is because you don't have the money for an iPad.
This was at least partly true before, but seems to have changed with the Samsung lawsuit. This caused a massive increase in sales of top end Galaxy tablets. The reason seems to be that Android has finally been understood as "a tablet OS like iPad, not a computer OS like I can't use" and at the same time "so good Apple had to sue to compete". Plenty of people are also going for the Galaxy Note and Nexus 7, for example, through choice.
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.
This is the same mistake as has been made by HP. The problem is there's another message here; "professional computing platform; not simple system for people to do what they want". This message is reinforced by the fact that Microsoft Office is there and Gmail and Google Maps are not.
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.
If you look up prices, you will see that other manufacturer's Windows tablets are actually coming in as more expensive. This looks like there are major design flaws in Windows 8.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
If Office RT supplies 1- the features 2- the stability like the others, and adds 3- perfect import/export, then most professionals on Office will gladly pay the same or a bit more than for any other tablet.
Consumers not hooked on Office probably won't though, and probably shouldn't. Android has most everything needed for content consumption, at half the price.
Interestingly, the version of office shipping on this thing is for home use only and must not be used in a commercial setting. (Why the F is it called 'office' if you can't use it there...?)
Office Home & Student 2013 RT Preview and the final version are not for use in commercial, nonprofit, or revenue generating activities. Commercial license options available (sold separately).
See also: http://surface.microsoftstore.com/store/msstore/Content/pbpage.Surface - see item 2 in the small print at the bottom. It seems to require a Business or Pro version of Office, pushing the TCO way past the iPad.
Yes, true, steady improvements until totally worthless
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?
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
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).
That's a meaningless claim unless you know the number that were pre-ordered. It's an entirely new product, so MS was probably conservative with the size of their initial order.
The price is important. I've not bought an iPad for the reason it is too expensive for what it is and what it does. The Windows Tablet just did the same thing. Why would I want to drop the money on a iPad or the Surface when the $250 Nexus or Galaxy does everything I need it to do? None of them replace the gaming computer, nor will any of them replace my work computer which runs my CAD programs, web development stuff and desktop publishing suite. All any of the tablets are good for are surfing the internet, doing email, playing games and some productivity for programs that don't require intensive processor power. Sure I've used my Nexus to work on my manuals but its just been the text part of various sections when i am on the bus. The tablets are a long way from replacing desk tops and laptops. All they have done is just replaced the Netbooks.
compared to the ipad: same price with the same no keyboard.
compared to the ipad: how much is support for peripherals worth to you?
compared to the ipad: being able to take files on and off of the device with a typical usb stick.
compared to the ipad: being able to run any program or game from the last 30 years of windows
compared to the ipad: directx
compared to the ipad: actually being a traditional node on any network
compared to the ipad: a keyboard. wow.
compared to the ipad: dockable to additional ports/memory/battery
compared to the ipad: anyone can program anything without restrictions
compared to the ipad: available with a proper core i5 ivy bridge that's faster than a ten-year-old desktop (the ipad isn't)
When has MS marketing ever been any good? Remember the whole MSN butterfly thing, with people running around in blue butterfly suits? It's amazing a company can stay in business with such horrible marketing for such a long time.
>>Then yes, it's worth an extra buck-twenty. What good is a cheaper device that I can't do my work on? That's just a toy.
Yep. I'm looking to replace my laptop, and am mulling getting the x86 version of the Surface. (The RT / ARM version of it doesn't interest me in the slightest.)
Looking at two equivalent laptops from Sony, the Windows 8 version of a good desktop replacement laptop is $320 cheaper than an identical Win7 machine. But I think Win8 is ridiculous, and a friend of mine who works for MSR told me there's no reason to go Win8 unless you have a touch screen. So I've been looking at the surface. But $999 for the Pro - with no dedicated graphics and no Blu-Ray player - puts it at more expensive than a desktop replacement with less usability for me.
I don't need a great video card in a laptop (my desktop is for Skyrim and etc.), but I do need something that will entertain me, and games and Blu-Rays are my entertainment when I'm on the road for work.
Yup. Probably 90% of the dev work I do is via RDP to a Windows server somewhere. It works just as well with a Mac client as it does a Windows client. The only two Windows only software I might use that doesn't have a Mac equivalent is Visio and MS Project and I very rarely use them. I have a couple of Windows VM's but I almost never have to use them...it's just my security blanket. It's still a Windows world but if you're a bit creative you can get my just fine with a Mac.
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.