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Analysts wary of Microsoft tablet 'fire sale'

Microsoft could make waves selling its Surface tablet on the cheap, but that could cause irreparable damage to its relationship with partners.

Would Microsoft try to price-match Google's $199 Nexus 7? Not likely say analysts.
Would Microsoft try to price-match Google's $199 Nexus 7? Not likely say analysts.

Remember the $99 HP Touchpad fire sale that instantly turned a product fail into a sales win?

So, would Microsoft try to pull a Crazy Eddie and lowball its upcoming Surface tablet to make it an instant hit?

I asked a couple of analysts and checked with some industry sources familiar with Microsoft's strategy, and so far I'm hearing that it's unlikely.

"We'd be astonished to see a $199 price point," said Rhoda Alexander, director of tablet and monitor research for IHS iSuppli. "It would be giving away money and losing money at the same time."

Roger Kay, principal analyst at Endpoint Technologies, also has serious reservations. "If Microsoft decided to go for the jugular and do the loss-leader to sell software, it would really screw with the Microsoft partners," he said.

Kay continued. "There are already a lot of efforts underway and money has been spent [by partners] on getting products to come to market with Windows 8. If they mess with their partners like that they may lose them entirely," he added.

Partners include companies like Dell, Samsung, and Lenovo, which Microsoft said on Monday would be bringing out RT versions of Windows 8 tablets and convertibles.

And those products are expected to be well over $199. "We expect to see something iPad-esque. In the range of $500...something in that ballpark," said Alexander, referring to the less-expensive RT devices.

Addendum: Note that there is some speculation that Microsoft may offer deals where a low price is subsidized via a subscription to a Microsoft service.