Microsoft (NASDAQ:MSFT) is hoping that Surface -- the specs-rich tablet that it will begin selling on Friday -- finally makes it a legitimate player in the booming tablet market.
There are a few reasons to get excited.
- Microsoft is hitting the airwaves with an ambitious marketing campaign.
- The devices come installed with Microsoft Office at no additional cost.
- The magnetically attached keyboard covers are pretty cool.
However, there are also plenty of reasons to be worried.
1. The price may be too high
The Surface -- without the keyboard cover -- starts at the same $499 price point as Apple's (NASDAQ:AAPL) iPad. Why? If Microsoft is serious about gaining market share early, shouldn't it be making setting itself up as the smarter economical choice?
Matching the iPad price will only force potential buyers to compare the two devices, and that's something Microsoft may not want right away, given the developer-backed ecosystem of Apple's App Store.
2. Windows 8 RT licenses may be too steep for its hardware partners
There could be a very good reason for the stiff starting price.
Tech site VR-Zone asked vendors at Asia's Computex convention what Microsoft was quoting them for a Windows RT license. This is the scaled-back operating system that the ARM-powered Surface is using. The quoted prices ranged between $80 and $95. Ouch!
That's pretty steep for tablet manufacturers that can just get Google's (NASDAQ:GOOGL) Android for free as an open-source solution. They will have to bake that cost into the retail prices for their Windows 8 RT tablets, and perhaps Microsoft is simply doing them a favor by charging so much for the Surface.
It's not doing consumers any favors, though.
3. Microsoft's biggest fans may hold out for the Windows 8 Pro models
Early adopters want the best, and they're willing to pay up and jump through hoops to get it. Well, they'll be out of luck come Friday. It's just the ARM-based Surface that's hitting the market. The Surface models powered by Intel (NASDAQ:INTC) to handle the horsepower required by the more full-featured Windows 8 Pro will hit the market in a few months.
In other words, diehard Windows buffs may pass until they get the more powerful -- and naturally more expensive -- Surface model.
It's a big mistake to either not have both models out at the same time or to not put out the higher-end model first.
4. The market hasn't been kind to anything but iPads and Android tablets
Consumers want a tablet backed by an operating system that they know will be around for years, and that's pretty important. They knowApple will keep putting out annual iPad updates. They know that Android as an open-source technology has legs in mobile gadgetry.
Why is it that the webOS TouchPad and Research In Motion's (NYSE:BB) PlayBook sputtered? They hit the market last year at similar price points to what the Surface will be going for. They were selling for less than half that price a few months later.
Microsoft is going to fare better than that. It would be hard to do worse. However, if Android tablets will be cheaper and iPad tablets will be cooler, there has to be more than simply native Microsoft Office support to sway consumers who have been burned before.
5. Zune? Kin? Surface?
Aside from the Xbox, Microsoft hasn't had a lot of success outside its software stronghold. It was patient with its Zune portable media player. It wasn't patient with its Kin smartphones.
Even the name of the new tablet was first used for its expensive touchscreen systems that failed to gain serious traction.
Consumers have every right to tread carefully here, especially when Apple may be stealing Microsoft's thunder a few days earlier with what's likely to be an iPad Mini announcement. Google, meanwhile, just announced a sleek Chromebook selling for half the price of the Surface.
Scratching the Surface
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Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, Intel, and Microsoft. Motley Fool newsletter services recommend Apple, Google, Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.