Microsoft this morning released the latest in a series of ads comparing Windows tablets to Apple’s iPad, but with a new twist — touting the slashed Surface RT pricing that yesterday required the company to take a $900 million charge to its quarterly earnings.

surfaceblackThe ad highlights the Surface RT’s integrated kickstand, USB port, and TouchCover keyboard before comparing the prices of the two devices: $599 for the 32GB iPad vs. the new $349 price of the 32GB Microsoft Surface.

“Do you still think I’m pretty?” asks Apple’s Siri as the ad concludes.

This is part of Microsoft’s broader effort to clear the inventory of the Surface RT in the face of lackluster demand for the tablet. The new price may move more units off the shelves, but it also puts Microsoft in a difficult position financially, beyond the $900 million charge. The risk is that consumers will view the Surface as more of a budget tablet, which will make it tougher for Microsoft to justify a premium price for future versions — assuming there are going to be future versions of the Surface RT.

One important point: If you’re considering buying one of the Microsoft tablets, the Surface keyboard is actually sold separately at that price, as noted in the fine print in the ad.

PreviouslyMicrosoft takes $900 million hit on weak Surface RT sales, misses earnings estimates

Comments

  • Guest

    The comparison should really be btwn the 32 gig RT machine Nd the 16 gig iPad, since you don’t actually get the full 32. At that price differential it’s a no brainier to pay $150 for the smaller/lighter form factor, better battery life, WAY better display and rich ecosystem. RT is dead meat.

    • Ktownmatt

      Why would you do that? The recovery disk only takes up about 4 GBs and you actually can add memory to it for a meager $40. So your 32GB can actually become 64GB for the same price as the iPad. You get Outlook and office for that price as well. Which then makes the offer significantly better than the iPad. The only real difference is the apps and mobile capabilities, but I just tether to my phone and I can access anywhere.

      • Guest

        And yet surprisingly it just doesn’t sell. It would be good if proponents stopped rationalizing and started seeing reality. It’s important for MS to see why the iPad is loved by so many, not why it is insufficient. Because it CLEARLY isn’t!

        • Guest

          iPad is already losing massive share to Android, so clearly an increasing number of people do find it lacking in some way, just as they eventually did iPhone. MS certainly needs to learn from this failure. But that doesn’t mean they’re on the wrong track with the concept that a tablet can be more.

          • Guest

            Simple, it’s price and openness. Same as it was an advantage for Microsoft 3 decades ago, when they took the computer market from Apple. MS don’t need to learn, they just need to remember the unlearned!

      • guest

        Is it just possible Surface is a solution to a problem that doesn’t exist?

  • n8

    But the iPad doesn’t run any of my OSX legacy apps :(

    • Guest

      That’s not even the main problem of the Surface RT. Nobody seems to want Office on their tablet. It’s like offering to put Excel on your living room TV, but people usually just want to watch movies on it, not work. Same with tablets, people want to surf the internet, watch movies, read ebooks, maybe share pictures, check facebook. THAT’S IT! Very rarely do they want to take work into their bedrooms or to their porch. So hardly anyone misses Powerpoint, Excel, or Outlook on their tablet. Apple and Google got that. And it’s the main misconception that tripped MS. We still don’t know if Surface Pro is a keeper, only that RT is undeniably a flop.

      • guest

        I wouldn’t mine having office on my ipad, but not if I have to pay a $199 yearly subscription for it, let lone adopt an inferior HW platform (RT).

      • Guest

        That must explain why Office translation apps lead the productivity section of the App Store. ANd you need to get your troll talking points straight. If the tablet is replacing the PC, it needs to be a productivity device, not just an entertainment one. Otherwise, it’s not a PC replacement but a companion.

  • Robert Wagner

    So I guess you get a free touchcover for that $349 now too? Otherwise, yeah, Microsoft is still inept at figuring out their own pricing.

  • guest

    I honestly think much of this has to do with Microsoft’s marketing and branding. Most people don’t take the time to sit down and compare minute technology details when buying a tablet, they pick based on reputation and which one they think will give them a feeling of fulfillment and security. That’s a band issue not a product issue. Microsoft has always been behind Apple in marketing and branding.

    • guest

      Just how do you think the respective parties got their reputations in the first place?

  • Guest

    I don’t know how MS deluded itself so badly that it thought it was smart to build so many of these devices up front. But when they saw they weren’t selling, why didn’t they drop the price? Surely it would have been better to have more RT’s out there, albeit at less margin, than to have the RT fail and right off $900M?

    • guest

      They didn’t drop price b/c it required taking a $1b loss on the books, which mgmt was reluctant to do (esp. in Q1). Totally understandable behavior.

      • Guest

        It’s not understandable at all. It’s totally illogical. This way they take a loss and kill the product. Whereas taking the price cut up front, as Apple did when iPhone initially proved too expensive, is the logical and correct way to proceed. Indeed they should have both dropped price and expanded distribution much sooner.

        • AnotherGuest

          Totally agree and was about to write the same.

  • guest

    These side my side ads are shockingly weak sauce. They pretty much invite consumers to try an iPad and compare. And side by side, iPad crushes RT, hardware feel and weight, screen resolution, UI and built in apps. Who do they think they’re trying to target?

    • Guest

      Consumers are already trying iPad. MS is just pointing out the benefits of the platform vs iPad for certain use cases. You may not agree with those, which is no surprise since you’re a troll anyway. But it makes much more sense than showing people dancing around with the product.

      • AnotherGuest

        I agree with you that the new ads are MUCH better than showing people dancing around, but stop calling everyone who doesn’t share your opinion a troll. Ad hominem attacks just reflect badly on you, because it appears that you can’t properly argue the actual issue. So no +1.

        • guest

          Except that I argued it as well as pointed out [correctly] that he’s a troll. Sorry if the truth hurts.

  • panacheart

    Numbers speak louder than opinions and specs.

    David Gilbert in IBTimes estimates MS is sitting on a stockpile of six million unsold Surface tablets.Estimates are that Microsoft has so far sold about 1.5 million Surface tables. It’s estimated that Apple sold about 32 million iPads in the 2012 holiday season.

    http://www.businessinsider.com/microsoft-dismal-surface-sales-2013-3

    • Guest

      The 6M inventory guess is from idiot journalists taking the $900M write down figure and dividing it by the recent $150 price cut. Considering the write down is SurfaceRT specific (not Pro), they only ordered 3M of those to begin with, and the write down covers unsold (possibly sold at lower prices) +keyboards+other accessories+spares etc, the real figure is likely much lower. And your sales estimate is from March, so not very relevant for a discussion in July.

      • AnotherGuest

        OK, but if they sold many more since March AND have a much lower inventory than 6 million devices, then how on earth could they justify a $900M write off? If say they ordered only 3 million RTs as previously speculated and sold around 2 – 2.5 million by July, then they must have had a heck of a load of keyboards to get to that amount. Just sayin’

        • Guest

          Who cares? It’s done. They have no incentive to make it bigger than necessary.

      • panacheart

        Valid point. But the sales figures still hold. And comparatively they’ve lost the market. It would take a miracle to reverse the tide at this point. And they likely have more inventory than they need, so unless sales pickup, there will be more discounts.

  • Sean

    Remember when the tout was “It can’t run flash” and “It can’t multitask”? How well did those talking points diminish the launch of the iPad and it’s successors, not to mention the Nexus?

    Microsoft needs to get out of the “what the competitor can’t do” business … and get into the “what we CAN do” business. The ONLY potential competitive advantage they had was to make a platform operate seamlessly with Microsoft legacy software. Something they obviously will always have the leg up on if they choose to. Instead, they launched with a product incapable of doing any better at it than the competitors with an App.

    At the same time their early marketing was poor (break-dancing in the office w/o showing any features of the unit), they unnecessarily diminished the user experience in their product (most hate the UI of both Windows8 and WindowsRT), and did not effectively offer consumers choice by having the Surface RT and Pro available together at launch (hence they tried to simply market “The New Windows” and never acknowledge RT in any advertising).

    Yet they wonder why it all failed at the tune of $900 million …. heh

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