PC vendors afraid a $199 Surface would price their Win RT efforts out, Microsoft shoots for 30% tablet market share
PC vendors are allegedly at arms about the rumored $199 price for the Windows RT Surface tablet that leaked yesterday, deliberately or not. The Nexus 7, they say, with its lowball pricing at cost, has undercut the sales of other 7-inchers tremendously, and has even encroached on the 10-inchers market territory since launch, so they rightfully expect the same thing to happen with a $200 Surface RT tablet. If Microsoft sells it only in the US, they say, or in limited markets like the Nexus 7, then the rock-bottom pricing wouldn't bother them this much.
Yesterday Acer's CEO directly pleaded that Microsoft reconsider the price gap it is intending to put between its own RT tablet and the other industry efforts by its company, but also by Asus, Samsung, Dell and Lenovo, which are all reported to be working on RT slates, unlike Toshiba and HP, which already said they will be focusing only on the Intel-based side of Windows 8.
That is the reason, sources say, that Microsoft might be aiming for at least 30% of the tablet market, as it feels it has offended its PC maker partners, and will likely have to do it on its own. The $199 price tag for the RT Surface will certainly be the best way to achieve that lofty 30% market share goal, but it might also have to eat a huge loss, if the production costs are much larger than two Benjamins.
Considering that IDC forecasts north of 200 million media tablets to be in circulation worldwide by the end of this year, Microsoft would have to sell about 70 million of its slates, ARM and Intel, to achieve its share target. If it eats $50 loss on each RT Surface, it will be quite the amount in the end, but the critical mass of users and developers such a market share would attract might turn out to be more valuable than a billion or two loss. After all, it just wrote off $6 billion from the aQuantive acquisition not long ago, and that didn't really accomplish anything, whereas the tablet market is the next huge growth area it can't afford to miss out on, even if it has to do it on its own.