The Surface challenge: Justifying a premium price tag

I think there's a market for premium, differentiated PC/tablet hybrids that aren't trying to compete primarily on price. I'm hoping Microsoft's Surface proves this category exists.

I think those who are predicting Microsoft's coming Surface PC/tablet hybrids will fail if they don't beat the iPad on price are wrong. I think the Microsoft Surface will fail if Microsoft fails to prove the devices are premium products worth premium prices.

We still don't know exactly how Microsoft intends to price the Surface, though CEO Steve Ballmer telling The Seattle Times he considered the "sweet spot" for the PC market to be between $300 and $800. We know Microsoft execs are continuing to insist tablets are PCs. So I guess that means Ballmer believes PC/tablet hybrids like the Surface -- or "pablets," as no one but me calls these things -- also should come in between $300 and $800. Keyboards like the Touch and Type keyboard covers for the Surface are probably extra, I'd think.

Ballmer also made it clear to The Seattle Times he isn't trying to be the price leader with Surface devices. I have to say I'm relieved to hear it. There will likely be more than enough look-alike, same-old Windows RT and Windows 8 tablets competing to be the low-cost leader/loser, I'd bet. 

There also seem to be some PC and tablet makers who aren't thinking about competing on cost --  but also don't seem to have anything much to warrant premium pricing. Microsoft's original guidance was that it would be pricing Surfaces in line with competitive ARM-based tablets and Intel-based ultrabooks.

ZDNet's Larry Dignan got his hands on a slide showing Asus' holiday line-up with its RT tablet coming in at $599 (plus another $199 for keyboard/dock), and its hybrid tab -- similar to the Intel-based Surface Pro -- coming in at $799 (plus another $199 for keyboard/dock).

Paul Spain, host of the NZ Tech Podcast, got Acer to share its planned pricing for its Iconia W510 Windows 8 tablet -- its Surface Pro alternative. It will start at NZ$999 incl tax (NZ$868+tax). "A direct conversion would make this US$712 excluding tax (as the norm for US pricing)," Spain noted. (Spain has more pricing straight from Acer for other Windows 8 hardware, as well.)

I'm not sure if any of the other PC/tablet makers will talk pricing at the upcoming September 27 Intel Clover Trail showcase , but both Acer and Asus -- along with  Dell, HP, Lenovo, Samsung and ZTE -- are all expected to show off their new devices at the San Francisco event.

We're just about a month away from the day the Surface RT -- the version that runs on an ARM chip but that won't run existing third-party Windows software -- will debut. None of us in the tech press have had any real hands-on time with production versions of the device so far. So we don't really know if the hinges, the touch pads, the keyboards, the casing and all the other components Microsoft execs touted back in June are really as amazing as they looked in the orchestrated demo. None of us has had any real hands-on time with the operating system powering these machines, Windows RT, either.

If the Surface RT works, looks and feels great, I'd be willing to pay more than an iPad for one. I know there are others like me who are tired of having lots of Windows hardware from which to choose -- but almost nothing worth splurging on.

Here's hoping the Surface team -- which seems to have as its charter "focusing on building devices and peripherals that fully express the Windows vision" -- comes out of the quality gates with a boom.

This item first appeared on ZDNet's All About Microsoft blog under the headline "Microsoft's Surface challenge: Proving it's a premium product worth a premium price."

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