Microsoft has set the price of its Windows RT Surface tablet with 32GB of storage at £399, setting up the stage for a battle with Apple's iPad, which has a similar starting price.

The Surface tablet with RT is 680g, 9.3mm thick and has a 10.6-inch screen. It will come with 32GB and 64GB storage, and a quad-core Nvidia Tegra 3 processor, which is based on an ARM processor.

With the 32GB model, Microsoft is also offering an optional Touch Cover accessory, which is a magnetic cover that also functions as a keyboard. The Reuters report revealed the Touch Cover will be priced at £99, while the Type Cover will cost £109. UK pricing was not immediately available for the 64GB version, which is priced at $699 with the Touch Cover in the US.

Other features include front and back cameras, Bluetooth 4.0, a microSDXC card slot, USB 2.0 ports and 2GB of RAM. The tablet will come with Microsoft Office Home and Student 2013 RT Preview, which will include Word, PowerPoint, Excel and OneNote. The Office software will later be updated to the final version.

Microsoft's tablet so far is the cheapest RT tablet in the market. Asus, Lenovo, Samsung and Dell will also be offering RT tablets after the OS is launched.

Surface is company's first Windows computing device, and expectations are high. Microsoft has made its own hardware in the past, succeeding with the Xbox game console but failing with the Zune multimedia players and Kin smartphones, which have both been discontinued. Microsoft has tried to differentiate from rival RT tablets with some interesting design tweaks like a kickstand and the Touch Cover accessory. Windows RT and 8 are Microsoft's first tablet OSes, and the company hopes to bring its package of home-grown software, services and hardware to rival Apple, which has a commanding lead in the fast growing tablet market.

Analysts have said Microsoft's entrance into the tablet market would create a rift with PC makers, which are key to selling more copies of Windows. But analysts also said Microsoft is looking to gain control of its hardware, software and services, and perhaps also wants to create a reference design of Windows devices for PC makers. But with the starting price at £399, Microsoft's Surface tablet competes directly with tablets from other Windows device makers.

Surface will be available for purchase starting October 26 at Microsoft Store locations in the US and Canada, and online in Australia, Canada, China, France, Germany, Hong Kong, UK and the US.

The Surface was introduced in June. The company also announced a version of Surface called the Surface Pro with an Intel Core processor and Windows 8 Pro, but specific pricing and availability information for that product has not been announced. The Surface with Windows 8 Pro also has a 10.6-inch screen, is heavier at 903g and has an Intel Core i5 processor based on Ivy Bridge microarchitecture. It has a host of features such as USB 3.0 ports and up to 128GB of storage, and is largely targeted at the enterprise or power users who need PC functionality.

Apple is set to launch its iPad mini just days before Microsoft launches Surface

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