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Microsoft Reveals Surface's Best-Kept Secret

http://www.fool.com/investing/general/2012/10/16/microsoft-reveals-surfaces-best-kept-secret.aspx

Evan Niu, CFA
October 16, 2012

One of the biggest and most important unknowns regarding Microsoft's (Nasdaq: MSFT  ) upcoming Surface tablet has been the device's pricing. Steve Ballmer didn't really help much when he said it could be anywhere from $300 to $800. He might as well have said it'll be somewhere between "a little" and "a lot." Thanks, Ballmer.

Secrets, secrets are no fun
Well, the software giant has now tipped the pricing of the new device that launches next Friday. The Surface will start at $499, entry-level pricing parity with Apple's (Nasdaq: AAPL  ) iPad. However, it will offer more storage than the tablet from Cupertino, with configurations starting at 32 GB compared to Apple's 16 GB.

Source: Microsoft.

Forking over an extra $100 will get a Touch Cover included, and another Benjamin on top of that boosts storage up to 64 GB. There's not too much credible competition to the iPad in the full-sized tablet market, but Amazon.com's (Nasdaq: AMZN  ) upcoming 8.9-inch¬†Kindle Fire HD is hoping to take a shot when it's released on Nov. 20. Let's see how these three tablet families stack up on pricing.

Product

Display Size

Storage

Price

Surface without Touch cover

10.6-inch

32 GB

$499

Surface with Touch cover

10.6-inch

32 GB / 64 GB

$599 / $699

iPad 3

9.7-inch

16 GB / 32 GB / 64 GB

$499 / $599 / $699

8.9-inch Kindle Fire HD

8.9-inch

16 GB / 32 GB

$299 / $369

Sources: The Verge, Apple, and Amazon. Kindle Fire prices shown with special offers.

Presumably, buyers should then be able to get a 64 GB Surface for $599, although that wasn't explicitly shown as an option. This would mean that Microsoft is planning to slightly undercut Apple by offering more storage at similar price points.

Apple's iPad Smart Cover costs between $39 and $69, so Microsoft's Surface Touch Cover costs a bit more ($120 when purchased separately), although it offers more functionality since it doubles as a keyboard.

These price points are specifically for the Windows RT flavor of the tablet, which sports a quad-core NVIDIA (Nasdaq: NVDA  ) Tegra 3 inside, while the more full-featured Windows 8 models with Intel (Nasdaq: INTC  ) chips will be priced higher. For example, Samsung has priced its ATIV Smart PC 500T, one of its first Windows 8 tablets, starting at $750. That device comes with an Intel Atom chip inside.

Not quite "resolutionary"
Additionally, Microsoft has been coy with releasing full technical specs of its Surface tablet also, which is rather frustrating if you're trying to perform a competitive analysis. It only provided a handful of specs (link opens PDF) when the device was unveiled over the summer and hasn't elaborated much beyond that. Today's brief disclosure also came with a full spec rundown.

Since a tablet is all about the display, those specs are rather important, and in this department Surface is no show-stealer.

Product

Display Size

Resolution

Pixel Density