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Best-guess $349 price for smaller Surface RT pits Microsoft against Apple for high-end Mini market

Gregg Keizer | June 13, 2013
Microsoft will probably price its own 8-in. Surface tablet running Windows RT at $349, just 6% higher than Apple's iPad Mini but nowhere near the basement $199 of Android rival

"Microsoft is under pressure to ensure that the pricing is in line with Windows RT [devices] from OEMs, which face the disadvantage of having to pay for the OS license as well," Singh said. "With OEM interest in Windows RT already very low, Microsoft cannot afford to undercut their last few partners, like Dell."

Singh was right: Most of Microsoft's long-time OEM partners have ignored or publicly distanced themselves from Windows RT, the limited spin-off of Windows 8 that runs only apps designed for the "Modern," ne "Metro" UI. Dell has been one of the few that has continued to back Windows RT.

"Even if Microsoft brings down the Windows RT license cost to $20, OEMs would need to price the device well over $300 to make a gross margin of just 30%," Singh pointed out, relying on reports that Microsoft has slashed Windows RT and Windows 8 license prices to OEMs building 8-in. tablets. "I would consider [$300] the absolute floor of the potential price range for the product."

Singh's price-forecasting track record has been solid. Last October, he said that the Surface RT tablet's BOM meant Microsoft would charge between $399 and $499 for a 32GB model, with $499 more likely because it would generate a gross margin of 38%.

Microsoft ended up pricing its entry-level Surface RT at $499.

He also pegged the Surface Pro's price at the range of $799 to $899; the higher price would produce a gross margin of 30%. In January, Microsoft introduced the 64GB Surface Pro at $899.

 

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