Microsoft Surface RT Tablet Priced To Compete With iPad, Not Android

It’s official: the Windows RT version of Microsoft’s Surface tablet is priced way higher than its Android competitors, and more on par with the new iPad. Is it worth it? Early reactions say probably not.

Microsoft finally took the wraps off its Windows RT tablet on Tuesday, formally announcing that the 32GB version of the tablet will cost $499, without the innovative Touch Cover that doubles as a keyboard. Adding a Touch Cover tacks on an additional $100, bringing the total price to $599. For the 64GB model, customers will need to shell out $699 - which includes the Touch Cover.

Customers can also buy Touch Covers separately for $119.99, available in black, white, magenta, cyan and red. If that's not good enough, there's also a separate, more versatile Type Cover in black for $129.99, which adds moving keys for a more traditional typing feel, Microsoft said. Both Covers felt great in our brief Surface hands-on earlier this year, at the Surface unveiling. But how they’ll hold up over time is anyone’s guess.

In a bid to promote the Surface RT as a must-have item (or perhaps to ensure that it could sell through its stock on hand), Microsoft said that the Surface would be available for pre-order for a limited time, at 9a.m. Pacific Time, at Surface.com. And Microsoft released its first official Surface commercial:

A Crowded Market

Analysts had predicted that Microsoft’s Windows RT tablet would be a consumer play, priced comparably to competitors in the consumer market. That doesn’t seem to be the case, evidence that Microsoft feels that the combination of a new Windows RT operating system and a suite of its Office products justify a premium price. 

The Surface with Windows RT, as its officially known, won’t compete directly with mainstream consumer Android tablets like the $299, 8.9-inch Amazon Kindle Fire HD (Wi-Fi) or the $249, 7-inch Google Nexus 7 (16 GB): its significantly larger 10.6-inch ClearType (1366-by-768 pixel) display sees to that. Instead, the Surface RT should be compared against products like the $399 Motorola Xoom, a 10.1-inch Android tablet with 32GB of storage; the $499 Asus Transformer TF700T-B1-GR, also with a 10.1-inch display and 32GB of storage; and possibly the $479 Toshiba Thrive, a 10.1-inch tablet with, yes, 32GB of storage. The ASUS TF700T-C1-GR also has a 64GB option, priced at $549.

Apple’s latest iPad, which sports a smaller (9.7-inch) but higher-resolution (2048-by-1536) display, starts at $499 for a 16GB, Wi-Fi only model. The 32GB and 64GB Wi-Fi-only models cost $599 and $699, respectively. 

For less than the price of a Surface RT, consumers could also select from a range of full-fledged Windows notebooks, with larger displays, such as this $349 Toshiba Satellite. Granted, the laptops aren't as portable - or as cool - as a tablet, but to one analyst, the price is the thing.

Why The Price Is Too High

“I think the RT pricing, including that announced by Lenovo, is too high for this product to make much of a dent in the market,” Ezra Gottheil, a tablet analyst for Technology Business Research, wrote in an email. “It can’t reasonably be described as a PC replacement, like the Windows 8 x86 devices, because the only Windows software it runs is its special version of Office. This advantage is undercut by the rumored (and announced and then denied) availability of Office on iOS and Android, and by the additional cost of the software.”

Although the price of Windows 8 tablets was expected to be high, Gottheil dubbed the RT tablets a “meta-tweener,” a “tweener between a tweener (Windows 8 x86) and a pure tablet like iPad,” he said. “I think Windows 8 x86 will be successful in business, because it is a PC, despite the price premium for its tablet form factor,” Gottheil wrote. “I don’t think Windows 8 RT can be successful unless and until its price is much lower.”

Gottheil said he was at a loss to explain the price premium. “The only possible difference I can imagine is greater battery consumption by the RT OS, requiring additional power management circuitry or more expensive batteries, but that seems far-fetched,” he said.

Other analysts saw the Surface RT matched up directly against Microsoft’s old foe, Apple. “Assuming Metro apps are available, Surface is competitively priced versus an iPad 3,” said Patrick Moorhead, principal at Moor Insights. “Unlike the iPad, Surface can perfectly edit Word, Excel and Powerpoint docs.”

Remember, Apps Are Key To Windows RT

The Windows RT tablets won’t be software-compatible with the full-fledged Windows 8 tablets, including the Surface Pro tablet, which Microsoft has yet to formally unveil or price. And if the Surface RT tablets start at $499, it's anybody's guess how much the Surface Pro will cost. In an interview with Bloomberg, Lenovo's David Schmoock said devices based on Windows RT software will cost anywhere between $200 and $300 less than similar products utilizing Windows 8 software. Most WIndows 8 tablets from other manufacturers, like HP's ElitePad 900 and Envy x2 hybrid among others, also still haven't been priced. The Acer Iconia W700 tablet PC, with an 11.6-inch display, has been announced at $799.99 with a 64GB SSD.

Windows on ARM (now renamed Windows RT) gives tablet makers the option to make better and cheaper Windows tablets that run on less-expensive, less-power-hungry ARM (a type of reduced instruction set computing - RISC) chips instead of the standard Intel X86-style processors that other versions of Windows require. Unfortunately, the main Windows code base is designed around x86, so total compatibility between the versions isn’t yet possible. (Check out this and fourteen more things you need to know about Windows RT.)

And while the price is going to directly affect your pocketbook, app compatibility should be the differentiating factor between Windows 8 and Windows RT, and to a large extent, between the Windows, Android and iOS worlds. “The real question is when you look at the Windows Store, will there be enough compelling applications to make [your purchase] worthwhile?” Michael Cherry, the lead analyst for Directions on Microsoft, said earlier this year.

Microsoft has said previously, however, that the Windows RT version of Surface will include a “preview version” of Microsoft Office, with Windows RT versions of Microsoft Word, PowerPoint, Excel and OneNote being replaced with full-fledged release versions later. 

The Surface with Windows RT will measure 10.81 x 6.77 x 0.37 inches and weigh 1.5 pounds, Micorosoft said, It will be encased in an ultra-durable “VaporMg” casing. Inside it will have an Nvidia T30 processor and 2GB of RAM. The tablet will have two 720p cameras, mounted front and rear, and will connect via Wi-Fi (802.11n) only.

The Surface will be available for purchase beginning Oct. 26, 2012, at all Microsoft Store locations in the United States and Canada, including in all 34 new holiday stores - part of the Windows 8 launch push.  In addition, Surface will be on sale online in eight markets across the world: Australia, Canada, China, France, Germany, Hong Kong, the United Kingdom and the United States, Microsoft said.