July 17, 2013, 2:22 PM — Microsoft has slashed the price of the Surface RT to $350 in an effort to spark demand for the tablet. While it's a move in the right direction, it's a little late, and it still doesn't go far enough to make the Surface RT attractive for business use in a market dominated by Apple's iPad.
Before the Surface RT launched there was speculation that Microsoft might undercut the competition by offering the device for under $200. Had it done so, the tablet almost certainly would have sold much better, but with long-term repercussions for Microsoft and the tablet market in general. That price is too low to generate profit or be sustainable in any way, and raising the price after the fact is a hard sell for customers.
When Microsoft revealed that the Surface RT would actually be $499, there was a collective groan of disappointment, and much of the tech media started writing the epitaph for the device before it was even on the shelf. Although the $499 Surface RT has double the storage capacity of the equally-priced entry-level iPad--32GB compared to 16GB--I argued at the time that the price was simply too much for an "untested" tablet.
For starters, it's not enough to just match the iPad in pricing--even with double the storage. The iPad is established as the leader among tablets, so a business or consumer looking to buy a tablet is much more likely to spend the $500 on an iPad than on a Surface RT. Then, there's also the fact that the Surface RT essentially requires the Touch or Type keyboard cover, which must be purchased separately and adds another $100 to $130 to the cost.
Windows RT can't run traditional Windows software, so the Surface RT is at a disadvantage compared to the Surface Pro, which at least is an actual Windows PC that doubles as a tablet. The Surface RT has more limited application, and is more likely to be used to augment a PC rather than replace it.
Still, the Surface RT is a solid device. It was good with Windows 8, and it will be even better with Windows 8.1. It comes with Office, and soon it will include Outlook as well. But now that Microsoft has launched Office Mobile for iPhone, and improved the capabilities of the Office Web apps for the iPad, Microsoft Office is much less of a factor in defining tablet choice.
So, what's the sweet spot? $300--with the Touch keyboard cover included. With the reduced price of the Surface RT, that setup will still cost $470 right now, which is unlikely to sway the purchasing decision of an IT admin. If Microsoft throws in the Touch keyboard cover, though, that $350 starts to look much better as a mobile business tool, and if Microsoft adds in the cover and drops the price to $300, it would have a hard time keeping up with demand.