Even though the Surface tablet has sold out though preorders, Analysts believe that Microsoft shot themselves in the foot with the price points Microsoft has selected. Charging so much for tablet could turn consumers away and have them purchasing cheaper tablets like the Kindle fire, the iPad Mini and Google Nexus. Microsoft stated they were charging that much to compete with the iPad, but this is market the iPad has dominated for 2 years. There is no chance Microsoft has against Apple by charging the same prices, charging something slightly lower would have given them a bigger share in the market.
With Microsoft charging $499 for an intro level Surface without cover, and $599 for the Surface with its keyboard cover, Microsoft is going to be fighting Apple at the high end, while leaving room for Google and Amazon to clean up on the low end.
He writes, “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.” (He thinks Microsoft should have charged $300 for the Surface plus the cover.)
