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Can Windows 8 and RT tablets survive at an up-to-$800 pricetag?

Preston Gralla | Sept. 19, 2012
Windows 8 has been designed for tablets more than for PCs, but a recent statement by Steve Ballmer suggests that it may have a high price tag, and that could spell trouble for Microsoft's attempt to gain market share

Windows 8 has been designed for tablets more than for PCs, but a recent statement by Steve Ballmer suggests that it may have a high price tag, and that could spell trouble for Microsoft's attempt to gain market share.

In a recent interview with the Seattle Times, he was asked, "With the Surface, are you planning to compete with the iPad on price or on features?" After saying Microsoft hasn't announced pricing, he said this:

"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....

"If you look at the bulk of the PC market, it would run between, say, probably $300 to about $700 or $800. That's the sweet spot."

It seems clear that he's expecting to price Windows 8 and Windows RT tablets in the same general range, or starting slightly lower, than the iPad. The latest iPads start at $499, and the the most expensive is up at $829.

It's equally clear that he's not planning to compete with 7-inch tablets like the Kindle Fire HD and Google Nexus 7, which sell in the $200 range.

Windows RT tablets in particular need to sell at bargain basement prices if they're going to succeed. After the Kindle Fire HD annoucement, Shaw Wu, an analyst with Sterne Agee, had this to say, according to GeekWire.

"We believe the pressure for MSFT to price its Surface tablet aggressively is now greater than ever. Initial press reports indicated a price point of $599, a premium to the new iPad, but we now believe it will likely need to price at $299 or lower to give it a fighting chance."

Peter Misek of Jefferies & Co. believes that because of Amazon pricing, it may be impossible for Windows 8 tablets to succeed. According to Market Watch, he said:

"It will become exceedingly difficult for others to enter the tablet market...We see very little chance that Dell and HP can successfully attack the consumer market with Windows 8 tablets."

There's already evidence that Windows 8 and Windows RT tablets are going to priced at the high end of Ballmer's estimate. ZDNet says that it got hold of Asus's pricing of Windows 8 and Windows RT tablets for the holiday season, and that the starting price for an RT tablet is $599, for a Windows 8 tablet is $799, and a hybrid tablet/notebook is $1,299.

 

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