IDC: Microsoft prepping 3m Surface tablets, but won't sell them at $199 a pop

IDC: Microsoft prepping 3m Surface tablets, but won't sell them at 9 a popMicrosoft's Surface tablet has to be one of the most talked-about tablets right now, especially since we actually don't know too much at all about it other than some basic OS and headline spec credentials.

So just how big a punt is Microsoft prepared to take on its Windows 8 tablet superstar? Well, IDC says the company is building up a stockpile of 3 million units ahead of its official launch.

When asked about the number of Surface tablets expected to come into circulation by the end of 2012, IDC analyst Bob O'Donnell told CNET: “Probably a little over 3 million, both [Intel] x86 and ARM,”

“If they build a few million units there's no way they can sell it through Microsoft store only,” he added. “So I think that they'll sell it through traditional retail also. You can't build that many products without having a much wider distribution strategy. They just haven't shared that [strategy] yet.”

Take note of the “if” at the start of that paragraph, but truth be told Microsoft must surely be aware that it won't get far if it doesn't make the Surface available through as many channels as it possibly can.

The other popular theory right now is that Microsoft will look to sell the Surface at around the same $199 mark rivals Amazon and Google are charging for the Kindle Fire and Nexus 7 respectively.

But O'Donnell has his doubts – unless we're talking $199 plus some kind of subscription tie-in. And even then, he suggests it won't be an easy sell.

“There could be two ways to get Surface. Buy it outright for, let's say, $599. Or $199 for a two-year subscription and you can get X,Y, and Z – which, oh, by the way, works out to more than $599,” he said.

“MS Office subscription? Any Windows RT product comes with Office. So, that knocks out that theory [something Microsoft itself has already ruled out].

“They do have a video store and music store. Theoretically they could give you a Netflix type or Pandora type deal with free access to music and video. But remember what happened to Netbooks and 3G, where you had to pay a monthly fee? That was a disaster. It took off initially but then nosedived.”

He also reasoned that given Microsoft is primarily a software company, pricing the Surface so aggressively would only compromise the primary objective for Windows 8 – selling licences to other hardware makers.

Hard to argue.

Read more about: Windows 8Microsoft Surface ProMicrosoft Surface RT

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7 comments

Pondlife  Aug. 20, 2012 at 09:15

Isn't that the same idc that puts out the ludicrous future phone market share tables? If so I'm seeing their opinion as worthless.

iamthehellspawn  Aug. 20, 2012 at 17:42

hmm i think the author needs to learn more about the real world of tech before writing this dribble!. let me see if i can educate the ignorant lol. firstly, lets look at the iphone 4s, it costs apple about £130($180)to build it. now lets look at the ipad 3, an ipad 3 and an iphone 4s share many parts. they both have the same processor, they both have same memory, same sort of flash same everything apart from a few details such as screen size etc. therefore if they can build an advanced phone such as the iphone 4s then they can build an ipad 3 for not much more cash. though i do not know how much it costs to build an ipad 3. i therefore think it is possible and viable for a microsoft to build a surface tablet(rt)for about $200. google are making and selling the nexus 7 for $199 and they are breaking even on that and that has some good hardware specs for what it is. so microsoft can make the surface tablet for not much more. so it could be possible to sell a surface tablet at $200 and just about break even or lose a handful of money on each one which microsoft could afford to do and would do in order to shirt loads of units. remember the xbox?????
and secondly lets look at the subscription idea. they do that idea already. you can buy a xbox 360 for $99 with a 2 year subscription to xbox live gold for $15 per month.
this seems to be working well and has not nose dived at all. mobile phones do a similar thing, get a phone free and pay for line rental each month. that idea has not nose dived and customers seem to love that idea!!!!!
so if microsoft offered a surface rt for $199 with 2 year subscription to xbox live gold then they would make a good profit on each one .
thirdly yes it would mean that microsoft would make more profit that way then just selling it outright but then by the authors logic no customer would pay for goods on credit or have a pay monthly mobile phone.
if a customer can get a shiny new gadget for free or cheap(or think its free/cheap)then they will go for it and they do in their millions. so a subscription model seems pretty good to me.
fouth the reason why netbook thing failed was due to netbooks failing to take off as an idea where as tablets have taken off and will out sell laptops in the next few years and also because of the fact that a pc subscription model fails due to being able to change certain parts of the pc/laptop/netbook etc. you can not do this with a tablet.

ie each tablet would have its own mac address and serial number etc. it is then tied into a database along with the subscription details and then if that user defaults and stops paying for their subscription(xbox live etc)then microsoft could simply disable or deactivate that tablets windows 8 os. remember it is windows 8 rt not full desktop windows 8 so is only about the metro or apps in other words so would be easier for microsoft to do that.

and because you could not get at the inside of the tablet easy and could not upgrade the components it means that you would be stuck with a bricked device.

if a user defaulted on their mobile phone they could put another sim card in, if they defaulted on a netbook subcription or pc subscription they could change the hard drive and change the os to a different one and in the process get around the safe gaurds so the device could not be blocked. where as that is harder to do in a tablet

ThatOneGuy  Aug. 21, 2012 at 00:43

hmm i think the author needs to learn more about the real world of tech before writing this dribble!. let me see if i can educate the ignorant lol. firstly, lets look at the iphone 4s, it costs apple about £130($180)to build it. now lets look at the ipad 3, an ipad 3 and an iphone 4s share many parts. they both have the same processor, they both have same memory, same sort of flash same everything apart from a few details such as screen size etc. therefore if they can build an advanced phone such as the iphone 4s then they can build an ipad 3 for not much more cash. though i do not know how much it costs to build an ipad 3. i therefore think it is possible and viable for a microsoft to build a surface tablet(rt)for about $200. google are making and selling the nexus 7 for $199 and they are breaking even on that and that has some good hardware specs for what it is. so microsoft can make the surface tablet for not much more. so it could be possible to sell a surface tablet at $200 and just about break even or lose a handful of money on each one which microsoft could afford to do and would do in order to shirt loads of units. remember the xbox?????
and secondly lets look at the subscription idea. they do that idea already. you can buy a xbox 360 for $99 with a 2 year subscription to xbox live gold for $15 per month.
this seems to be working well and has not nose dived at all. mobile phones do a similar thing, get a phone free and pay for line rental each month. that idea has not nose dived and customers seem to love that idea!!!!!
so if microsoft offered a surface rt for $199 with 2 year subscription to xbox live gold then they would make a good profit on each one .
thirdly yes it would mean that microsoft would make more profit that way then just selling it outright but then by the authors logic no customer would pay for goods on credit or have a pay monthly mobile phone.
if a customer can get a shiny new gadget for free or cheap(or think its free/cheap)then they will go for it and they do in their millions. so a subscription model seems pretty good to me.
fouth the reason why netbook thing failed was due to netbooks failing to take off as an idea where as tablets have taken off and will out sell laptops in the next few years and also because of the fact that a pc subscription model fails due to being able to change certain parts of the pc/laptop/netbook etc. you can not do this with a tablet.

ie each tablet would have its own mac address and serial number etc. it is then tied into a database along with the subscription details and then if that user defaults and stops paying for their subscription(xbox live etc)then microsoft could simply disable or deactivate that tablets windows 8 os. remember it is windows 8 rt not full desktop windows 8 so is only about the metro or apps in other words so would be easier for microsoft to do that.

and because you could not get at the inside of the tablet easy and could not upgrade the components it means that you would be stuck with a bricked device.

if a user defaulted on their mobile phone they could put another sim card in, if they defaulted on a netbook subcription or pc subscription they could change the hard drive and change the os to a different one and in the process get around the safe gaurds so the device could not be blocked. where as that is harder to do in a tablet


Yikes. Thats a lot of writing to make a point. But I agree and I'll up that. What if Microsoft was to bundle the Surface with a 360, like with the back to school deal they've got going on. An Xbox 360, a 32 GB RT, and 2 year subscription to live for 249 down and 20 per month for 2 years. That comes out to $729. It could be the last push for the Xbox 360 before the next gen game system from MS comes out, and also get the Surface on their feet

Pondlife  Aug. 21, 2012 at 01:05

As a basic point I think you need to be able to tell the difference between the authors words and those in direct quotes from someone else.

The basic hardware guestimate cost for ipad 3 was about $380, with large amount in screen and massive battery.

Whilst HP proved you can shift quite a few units selling them at far below cost it wasn't exactly a fine business model. MS won't be looking to lose that much on each one.

Tablets on subscription haven't been a good selling point, at&t for example just gave up on them even less so if tablet isn't going to be 3g and include any data plan.

Subscriptions on phones is a dead end comparison because as you pointed out the phones are normally free not $199 and usually here phone and package are better value than buying phone outright unlike the dearer as you said for the tablet. Many phone deals on hukd are cheaper for phone and contract than just the sim free handset cost nevermind the additional network costs for the sim free handset.

Netbooks sold bucketloads in their time, netbooks with 3g were the dreadfully poor sellers.

The bit about defaulting on subscription interesting idea, networks could technically do that on phones regardless of changing sims but don't believe they ever have. I think that could have a damaging effect on sales too fwiw.

Would love to see sales figures for the $99 xbox+2yrs $15/m live anyone doing that especially this late in the xbox lifecycle is very financially challenged.

satchef1  Aug. 21, 2012 at 22:40

Non-news again. Too many 'if's and 'maybe's. He's not actually saying anything that can't be found on pretty much every tech forum on the web.

satchef1  Aug. 21, 2012 at 22:48

Netbooks sold bucketloads in their time, netbooks with 3g were the dreadfully poor sellers.

I suspect this was because consumers aren't completely thick. They know when they're being taken for a ride. A £199 netbook for 'free' with a £40/month mobile bb sub was never going to work. Anyone who can afford a £40/month mobile bb sub can afford to buy a £199 netbook. They might have to save for a few months or put it on the credit card, but they can afford it.

Offer people a sub that's competitive versus buying outright and many will be interested. The iPad did okay this way, and generally the cost of the contract wasn't far off the cost of an iPad plus an equivalent mobile bb sub.

Pondlife  Aug. 21, 2012 at 23:18

I don't know there doesn't seem to be a lack of them entirely. There isn't an outbreak of brighthouse stores throughout the country for example due to people knowing when they are being taken for a ride.
How well did ipad subs do then? I didn't think take up for those was that impressive tbh. Wonder what the breakdown for wifi vs 3g ipads is.

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