The Internet is awash with a rumour that Microsoft is getting ready to sell its upcoming Surface tablet for just $199.
This would make it approximately £152 if you add UK VAT, let’s call it £159 to match the Google Nexus 7. Or £199 if you want to read lots of Rip Off Britain headlines.
This reminds of us Ian Betteridge’s Law Of Headlines: "Any headline which ends in a question mark can be answered by the word 'no'". In further clarification he outlined it as: “The reason why journalists use that style of headline is that they know the story is probably bollocks, and don’t actually have the sources and facts to back it up, but still want to run it.”
So here it is. There’s your headline, and there’s your answer. Feel free to add your own thoughts in the comments section.
Microsoft's Surface Tablet. Price TBA but almost certainly not going to be $199
As far as we can tell the story first appeared on Engadget from an unnamed conference attendee at Microsoft’s TechReady15 conference. And spread from there where it went from nonsense, to rumour, and is now approaching the status of “unconfirmed fact”.
The main thing to note is that the Surface does not yet have a release date or price. We assume it will cost approximately the same as an iPad, or perhaps slightly less in order to boost sales like rival Android tablets. Which will make it more in the £400 price mark, rather than the £159 price that Google is selling its Nexus 7in tablet.
See also: Google Nexus 7 (vs iPad) review
The reasons why Microsoft probably won’t sell its Surface for such a ridiculously low price are manifold. The fact that it would lose a stupendous amount of money on each Surface sold is probably quite a biggie. It costs Apple approximately $326 to build an iPad and that's actually considered quite low given that it owns much of the IP and is cranking them out in massive quantities. The Microsoft Surface with its built in keyboard will almost certainly cost more than that to build.
Ah but Microsoft will make it back on the apps, won't it? No it won't. According to this report the average mobile app purchaser spends just $14 per month, with the median amount being $7.50 (so that's most people spending $7.50 and a few high spenders). So Microsoft can look forward to losing billions of dollars over the next few years and probably never ever making its money back. Does that sound like Microsoft to you?
It would also destroy the OEM business that Microsoft has spent years building up by putting the likes of Acer out of the tablet market. So it would also lose all its licensing revenue for Windows 8 on tablet devices.
Not that we’re saying Microsoft isn’t mad, it clearly sold the Xbox at a loss for many years only to make up money at a later date. It’s also likely that Microsoft is (like Apple and Google) working on a cheaper 7in version of the Surface that may well be priced in the $199 range.
But we don’t think it’s mad enough to launch the full-scale Surface at a price point that would put it out of business. And there’s no evidence to suggest that it is other than the scribblings of the internet.
This is why Apple does not pre-announce products, it releases a product and a price and then tries to get it on sale as quickly as possible. Microsoft is now faced with the prospect of a disappointing Surface launch, because no matter how good it is (and that will potentially be average) it won’t live up to the mythical $199 price point people have in their heads.