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Microsoft’s Surface Pricing Could Be a “Fatal Mistake,” Analyst Says

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Microsoft recently announced its Surface tablet pricing and, after a day it went on sale, the 32GB model is already on back-order for 2-3 weeks. It certainly seems like consumers are flocking to the tablet already, but at least one analyst is worried that Microsoft may have priced its tablets too high.

“Our view on this is mixed. On one hand, this should give breathing room for its hardware partners to price more aggressively,” Sterne Agee analyst Shaw Wu said in a note Thursday. “But we believe a key risk is that Surface’s high pricing could prove to be a fatal mistake and relegate it to be a niche No. 4 or No. 5 player. We believe Nexus 7 and Kindle Fire HD will likely see considerably higher volume given their low $199 price points and stronger ecosystems with iPad retaining its commanding No. 1 position.”

“We believe a key risk for Microsoft is that pricing for its Surface tablet could end up being a fatal mistake with the delta too significant, particularly against Google and Amazon,” Wu continued. “As we have said before, we believe MSFT needs to price aggressively to give it a fighting chance in the highly competitive tablet market. We believe $299 including the cover-keyboard would have been much more compelling.”

We agree somewhat, especially since Microsoft’s Surface RT tablets are unproven, and since it’s now going to go head-to-head with Apple. Still, its early sales already seem to suggest there’s initial success for the tablet.


Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...

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