Analyst: Microsoft’s Surface RT tablet priced too high, could be the next Zune

“Microsoft finally announced long-awaited pricing on its Surface tablet starting at $499 and $599 with its innovative cover-keyboard,” Shaw Wu, analyst at Sterne, Agee & Leach, writes via Barron’s.

“Our view on this is mixed. On one hand, this should give breathing room for its hardware partners to price more aggressively. But we believe a key risk is that Surface’s high pricing could prove to be a fatal mistake and relegate it to be a niche No. 4 or No. 5 player,” Wu writes. “We believe Nexus 7 and Kindle Fire HD will likely see considerably higher volume given their low $199 price points and stronger ecosystems with iPad retaining its commanding No. 1 position.”

MacDailyNews Take: With Apple’s iPad mini looming large.

Wu writes, “From our supply-chain checks, we have picked up relatively modest Surface build plans of two million to three million units versus five million to six million for Nexus 7 and three million to four million for Kindle Fire HD. But suppliers we talked to believe this could turn out optimistic as it is not clear what sell-through will be given highly competitive dynamics… We believe its high price points and limited distribution will likely relegate Surface to be a niche player… As Microsoft, Google and Amazon seek to become more vertically integrated combining hardware, software and services, we would like to note that it isn’t easy to deliver a similar or higher level of quality and seamless integration as Apple… Microsoft attempted to do so with the Zune in MP3 players and Kin in smartphones, both of which didn’t turn out too well.”

Read more in the full article here.

MacDailyNews Take: Ballmer T. Clown. We like his “strategy.” We like it a lot.

[Thanks to MacDailyNews Reader “GetMeOnTop” for the heads up.]


  1. But but but but it has pretty colored squares on the screen. How can it fail? They must have spent billions on developing those pretty colored squares. Billions I tell you.

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