Microsoft Reveals Surface's Best-Kept Secret

One of the biggest and most important unknowns regarding Microsoft's (MSFT 1.65%) 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 (AAPL 0.64%) 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 (AMZN 1.30%) 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.

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 (NVDA 3.65%) Tegra 3 inside, while the more full-featured Windows 8 models with Intel (INTC -0.38%) 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.

Sources: ZDNet, Apple, and Amazon. ppi = pixels per inch.

That puts the display in the ballpark of the iPad 2, while newer models from Apple and Amazon feature much beefier display panels. Google's smaller-sized Nexus 7 comes in at 216 ppi, and already has nearly the same number of pixels at 1280 x 800 (same as the 7-inch Kindle Fire HD). Apple's cheesy "resolutionary" tag line for the iPad 3 may sound awfully dumb, but when it comes down to it, the Retina display delivers. On paper, Amazon looks competitive in that department.

Secrets, secrets hurt someone
In choosing not to price at a significant discount to Apple and merely offering modest feature trade-offs at the same price point, Microsoft is going to have a tough time competing with the iPad directly in the full-sized tablet arena. Thus far, no rival has seen meaningful success, and the only players gaining any traction whatsoever have done so in the smaller-sized tablet market, most notably Amazon and Google.

Of course, the most important challenge that Microsoft will immediately face is content and app selection. Apple now has over 250,000 apps optimized for tablets, and Google continues to push its developers to do the same for their Android offerings, hoping to catch up. Microsoft has just 2,000 Windows 8 apps available in its Windows Store, a small subset of which isn't compatible with Windows RT.

A little bit of extra storage isn't likely to make up for the sparse app selection and poor display quality. Amazon has a much better shot at competing with the iPad with more apps, better display, and lower price point. Microsoft is going to get hurt.