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

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?

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