An anonymous source has reported to Engadget rumored plans of Microsoft releasing their 32GB Windows 8 RT Surface tablet at $199. Presumably, this would be their entry level tablet, laying the groundwork for larger and faster tablets later on. It goes without saying that Microsoft has some work to do with Apple and Google having held the majority of the tablet market for years. Microsoft is far behind, and many consumers already have already chosen a tablet and ecosystem to invest their money in.
How does Microsoft play catch-up? They do it by releasing a cheap tablet that beats the competition’s offerings. Something that is fast, solid and affordable. They raise the bar on what’s available at a lower price range.
Microsoft needs to prove that Windows 8 can be a viable platform on a tablet. Previous versions of Windows have worked on tablets, but have never really been built from the ground up with a focus on streamlining the tablet interface. They need to prove that it runs well on these devices and that it’s worth a consumer’s time and money.
Is the Surface too costly to sell at $199? Selling at a loss is not something new to Microsoft, but they have their ways of making up for lost funds when they need to gain market share. The Xbox 360 was sold at a loss and Microsoft has made back those losses through software licensing and accessories for the console. With items like the Touch Cover and software in their App Store they would be able to do the same thing with Surface.
It has been claimed that if the Surface sells at $199, Microsoft’s licensing costs for the Windows 8 RT operating system in addition to hardware costs would drive the OEMs away from making Windows 8 tablets. That may be the case currently, but Microsoft is sure to realize that if they want to keep themselves in the game, they’ll need to compromise with OEMs by lowering the licensing costs or be prepared to go it alone.