Microsoft’s Surface pricing dilemma is two opportunities waiting to be missed

In an article that appeared earlier today on BetaNews, Robert Cringely talks about how Microsoft can compete with Apple on pricing but -- due to supply and manufacturing issues -- won’t be able to undercut its rival. It’s an interesting observation, and one that’s based on sound thinking.

But Surface is a curious beast. The iPad is, to all intents and purposes, a scaled-up Smartphone. Microsoft’s tablet (or tablets, rather) is a touch-screen PC. It runs Windows 8, and Office, and applications like Photoshop.

PCs usually retail for a lot less than Macs (not just, as Robert would have us believe, because they are inferior, but because Apple can charge what they like and the fanboys will still lap it up) and we’re used to that. A slim, touch-screen device, fashioned from Mithril (or whatever) that can run proper programs, has a keyboard that’s also a case (genius!), and comes direct from Microsoft, could be positioned as superior to the iPad in every way. Surface is not just for checking email, browsing the web or updating Facebook. You can do substantial things with it -- like office work, or video editing. You can use it to write a novel, or pilot a rocket to Mars!

If Microsoft does what it should, and positions Surface as superior to the iPad, and all of the other casual-use tablets out there at the moment, it could easily slap a superior price tag on it.

Apple premium-prices its products because it can. Microsoft would love to be in that position, too. Surface would be the one product that would give it that chance.

Microsoft’s Problem

But, here’s the rub. Microsoft really needs Surface to succeed. I mean, really, really, needs it to succeed. Because Surface runs Windows 8, properly. Surface runs Windows how it’s been designed to run. Windows 8 has, after all, been built with touchscreen devices in mind.

People talk about Windows 8 as being an operating system, but it’s more than that. It’s a strategy. Microsoft wants you to use its OS on every device you own. It wants you to see its logo when you fire up your desktop PC or laptop, when you turn on your Windows Phone 8, and when you use a tablet.

On the PC, controlled using a keyboard and mouse, Windows 8 is clumsy and awkward. Joe Wilcox sums up the experience perfectly here, and for that reason, the new OS could well flop. Windows XP die-hards are unlikely to want to switch to it and Windows 7 users will be similarly reluctant.

Windows Phone 8 will mostly be snapped up by, well, who knows? Most of us will be sticking with our iPhones or Androids.

Which leaves Windows 8-powered tablets to save the day. And by tablets, I mean Surface. So Microsoft could, if it was feeling very brave, go low with the price. Take a big, big hit and hope for the best. A quality device like Surface, sold at an incredibly attractive price, would absolutely fly off the shelves. In a stroke Microsoft would be back in the game, Windows 8 would be a winner, and boring old PCs would truly be consigned to the dustbin of yesteryear. Apple would be on the back foot for the first time in a long time.

Except, of course, Microsoft doesn’t have that kind of vision, or balls, for that matter (it doesn’t really even have the money). Microsoft has always been a bottom-line company, so it’ll doubtless just price Surface somewhere middling -- not too expensive and certainly not too cheap -- and watch as it sells about as well as all the other tablets that don’t have an Apple-logo etched on them. Probably.

Or will it? What pricing approach do you think Microsoft will take? There’s no prize for correct guesses, but we’d be interested to see what the consensus is amongst BetaNews readers.

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