So can we talk about the pricing strategy for the Surface Pro 3?

DockingStationforSurfacePro3

OK so it’s time to piss off a bunch of people and talk about the pricing of the new Microsoft Surface Pro 3.

Ever since Microsoft came out with the Surface, I have been one of those people who thought that in light of several very compelling factors, the pricing has always been off.

Here are the prices that Microsoft are charging for the Surface Pro 3.

  • The 512GB Intel i7 tablet is $1949.
  • The 256GB Intel i7 tablet is $1549.
  • The 256GB Intel i5 tablet is $1299.
  • The 128GB Intel i5 tablet is $999.
  • The 64GB Intel i3 tablet is $799.

Source – Microsoft Store.

The entire Surface line of devices is basically Microsoft’s attempt to change a paradigm. Their theory of the case is that we don’t need both a laptop and a tablet, we can accomplish what we need to get done with a Surface Pro 3.

While that sounds really great, there are several factors that Microsoft do not seem to be taking into consideration with their pricing.

Theories need to be tested

Do we need only one device? That is an open question. While that sounds really intuitive and good to me, the answer may very well be no. Maybe we actually do like having two separate devices for two different functions. Stranger things have happened. Seems like while they test that theory, they should probably make the devices cheap to see of people bite.

This hardware stuff is (relatively) new to Microsoft

While it may seem like Redmond has been doing this forever, the truth is that this Microsoft is pretty new to this PC/Tablet hardware game. Consumers are not used to buying Microsoft non-OEM computers and it’s still going to take a while for the general public to appreciate and respect the hardware at premium prices.

It’s not a tablet, it’s a real computer is a hard sell

If i had a dollar for each time someone told me that crap, I would have mansions and butlers. That might be great tech speak to me and you but it’s a lot harder to justify spending $2000 for something that looks a hell of a lot like an iPad. It just is, it’s not fair, it’s not right but it really just is. Sorry.

What about the Asus Transformer T100?

The entire existence of this beauty seems to undercut the rationale for pricing (even) premium hardware at $2000. Asus made something slick, sweet, light and cheap. You can get the device (WITH KEYBOARD) for less than $300.

transformer-t1001
The Asus Transformer Book T100

No keyboard bundled? Really?

At those prices above, the devices don’t even come with a keyboard bundled. THAT. IS. CRAZY. No more needs to be said there.

I see this so clearly but bloggers tend to have blind spots so I thought it might be fun to take some time and ask around.

I asked a bunch of people I respect why they thought the pricing was what it was.

Wes Miller from Directions on Microsoft said the following:

It is high if you’re comparing it to an iPad. I believe Microsoft’s stance is that most iPad users also have PCs, so SP3 lets them only purchase one device and theoretically meet both use cases. Personally, I feel this story only works if the user is shopping for a new PC anyway, and has no tablet. Otherwise, yes – I think the pricing is too high.

Why so expensive? Because it’s an expensive device, and Microsoft doesn’t want to sell it at a loss.

Tony Bradley from The Bradley Strategy Group disagrees with me. He said:

When Microsoft launched the Surface Pro, it positioned it as a tablet and expected people to choose it over an iPad or a Galaxy Tab or whatever. That marketing position ignored the fact that the Surface Pro is also an actual PC running the full version of Windows and all traditional Windows software, and made it a choice between spending $400 or $500 on a tablet, and spending $900 on a tablet. iPad wins that bet every time.

Now, though, Microsoft has evolved the Surface Pro to be even better than it was originally, and—more importantly—it has properly positioned it against ultrabooks rather than tablets. Instead of the “very expensive tablet that can run Windows software”, the Surface Pro 3 is the “reasonably priced ultrabook that also offers the flexibility of being a tablet.” I think the tagline “The tablet than can replace your laptop” hits the nail on the head.

Originally, I thought Microsoft should have subsidized the Surface Pro and taken a loss to offer them at the same $500 as the iPad. It may have had more success if they had, but that would also be a hard cycle to break out of. Once you offer it at $500 for a “limited time” nobody would be willing to spend $900 on it again. Now, Microsoft is instead positioning the Surface Pro 3 against the MacBook Air. In most configurations they’re priced about the same. The higher-end configurations the Surface Pro 3 is more expensive, but for your extra $100 you get a thinner, lighter “laptop” that can also be a tablet—so the price is still reasonable.

I could make an argument for undercutting Apple, but I like that Microsoft has the confidence to go toe-to-toe with the MacBook Air. There is a psychology to cheap prices that people think they’re cheap. People are willing to spend for things of value, and if you cut the price to artificially boost sales you also undermine the perceived value.

Tony accurately points out the whole Surface Pro 3 versus Macbook Air conversation.

Macbook-Air
The Apple Macbook Air

He’s right but one of the challenges that the Surface Pro has in that area is

The Surface Pro comes with Windows 8.1

One of the beautiful things that Microsoft have ALMOST successfully done with this device is change the conversation.

The truth is a lot of consumers still don’t care for the Windows 8.x versions and that is also going to be a factor when they are making the Macbook comparisons.

Interesting.

Anyway, it’s an open question that is interesting to me but you all know where I stand, let the flames begin.

This is about you!

Use the comments below and tell me, do you think that Surface Pro 3 is too expensive?

Important - If you would like to find out more about the next version of Microsoft Windows - Windows 9, here are some links you should probably check out.

  • Daniel Tayler

    It is waaay too high. Who the fuck would pay $2000 for a tablet?

    You’ve got to be shitting me…

    • Gary Mefford

      the need to go under i have a surface rt refurb gave 169.00 with ship works great but would not give what they want for the others

      • WillyThePooh

        I remember the lowest price for surface RT is $199. For $30 less, I would not go for a refurb.

  • eamon

    the price is wayyyyy over the top + they dont even include the keyboard

  • Bob Fahlin

    I owned the first Surface Pro for a year. Used it as my only mobile computing device. Loved it, until the eye fatigue of working on a small screen set in. Bought the Surface Pro 2, and shortly thereafter ditched it for a Yoga Pro 2 (screen size being the primary issue).

    The Surface Pro 3 looks like a very compelling device. The price is hefty, but the build quality is tough to beat. All-in-all the surface
    line is priced between 10%-15% higher than the competition, particularly when you consider that most laptops (the devices Microsoft is now targeting) include a keyboard. If the keyboard were included, you would actually be hard pressed to find a device with a similar build quality andspecifications for less. Particularly when you consider the native digitizer and pen integration.

    I think the Surface Pro 3 may be the device that brings me back into the Microsoft fold…

    • http://www.learnabouttheweb.com/ Onuora Amobi

      Awesome. Glad to see some people who are pro sp3 (pun intended).

      • Alberto Gorin

        i read Toshiba coming with line of affordable window based tablets
        if i had to buy service pro take long time to save money
        am waiting for tablets
        think Microsoft is aim at business community

  • Ben Ari

    They live in an echo chamber down there in Redmond. Reality only intrudes when the sales numbers come in once a quarter. So keep dreamin’, Microsoft. Tell us how many of these uber-expensive devices you sold in 6 months time. Hint: you have 6 months to start spinning the story…..

    • Colin Spencer

      First impressions are same as yours, Gary. But, after thinking about it, I imagine that Microsofts aim might not be “how many” sold, rather than “who buys them” and “what do they use them for? Out of my league, but I can imagine them being part of the system in law offices, financial institutions, and in executive offices all the way down the management levels in big companies. Integration with the full Microsoft suite of software, and power to run most of it, plus portability will also get a lot of government business. Particularly in defence.

    • WillyThePooh

      For you and me, probably we could only afford ASUS T100 or the RT. Don’t even dream on the SP3, Ben.

  • Rodney Longoria

    Well, this is way more than “just a tablet”. It is not designed to be another iPad wannabe but more like an ultrabook (and look at THOSE prices). They are looking at the high end of the market, so it is not for the average joe out there. Instead of the corporate user lugging around an ultrabook, a tablet and a smart phone, Microsoft was trying to come up with a device that would eliminate one of the other devices. Smart move AND a smart sell to Fortune 100 companies, I think. Look at the Macbook Air plus an iPad priced together (with their contracts added), and you’ll see what I mean.

    The only issue I have with their pricing is it does not include a keyboard (kind of like owning a bowling ball without the carrying case).

  • Walter B Hart

    Too expensive for me I would buy one if they gave me a good trade in price for the Pro 2 I recently purchased. I have used every windows system usually before they came out, using the Beta versions. I find windows 8 very hard to get used to using windows 7 is the best of all I started using it with the pre beta version. I will continue to use 7 on my desktop.

  • deadendbill

    As a retired Road Warrior I Love the Surface and think the Surface Pro 3 is worth every penny spent on it! Just wish I had it when I was working. I had the Surface RT 32g for a bit over a year and found a problem with the micro SD slot. Took it to MS Store and they gave me a new, not refurb, Surface RT 64 with a Complete package for $99. That included all service, all tech support and new two year warranty…

  • Bart

    These are built with anywhere between 40-60% profit so they are over priced. There is nothing wrong with Microsoft making a profit but to compete with the Ultrabooks or a MacBook Air the keyboard should be included. Heck even the 1st commercials with the dancing and surfaces all showcased the keyboard as if it was a feature not an accessory to purchase. Maybe if the SSD and RAM were upgradable or replaceable as needed it would be about right. From Intel the CPU supports 16 GB RAM.

  • Charles V Brown Jr

    It is priced about right — the Surface Pro 2/3 are high-end tablets with UltraBook laptop performance.
    The Surface Pro is in the same class as the MacBook Air and lower-end MacBook Pro and not the iPad.

  • AZ-J

    Way too high! Even as laptop this is too high!

  • Ray C

    I do think the prices could be 100-150 less for each device. Also, I think once you get one of the models above 1,000, it should come with the keyboard

  • 1stkorean

    Starting @ 800.00 US (815,162.00 KRW) and topping out at 1950.00 US (1,988,590.00 KRW) that is a lot of bucks no matter where you are. I would even suspect that is a lot for enterprises too. If MS wants to get a jump on Android and the other guy they have to make it more appealing especially here in Korea since we have Samsung and LG at our backdoors and many Koreans would rather support our home towne boys over some foreigner who is just here for the Won (for those who don’t know Won is our money)