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Will Microsoft Surface Meet Consumer Demand With 3 Million Devices?

Microsoft is likely to build slightly more than 3 million Surface tablets, according to an IDC analyst. Also, one of the central questions before the launch of the Microsoft tablet is how will the company price it?

Microsoft Surface
Bob O’Donnell of IDC, a market analysis firm, thinks Microsoft’s plans are only a few million units for the last quarter of 2012, “probably a little over 3 million, both [Intel] x86 and ARM”. This leads us to the next question: sales. This quantity, O’Donnel believes, can’t be sold through Microsoft stores alone, and they will use the old-school traditional retail route to success. It’s about the distribution strategy, the analyst notes, this quantity hints towards a wide, global-scale sales of the Surface tablet as soon as it goes public at the end of October.

As Microsoft emphasized during its presentation, Windows RT devices will be the first to hit the stores, but they won’t support older “legacy” software running the previous version of Windows, while Intel-based tablets will enable this feature.

The market analyst also shared his thoughts about the Microsoft Surface RT tablet price. We have no reliable information about the device’s price point. A previous rumor suggested it will be priced at $1,000, but the webshop based in Sweden has dropped its initial offer to pre-order the device for the aforementioned price. Other rumors are vague enough to create confusion: some voices mention a $599 price tag, while others say the Surface tablet will surely cost $199. Anyways, O’Donnell thinks there will be two ways to purchase a Surface. The first possible option is to buy it outright for $599, and the second, with a 24-month subscription.

The subscription has received some theoretical support from Hal Berenson, a former Microsoft manager, saying this is “completely within expectations. And, in fact, the $99 Xbox deal is just telegraphing it, for all who are willing to listen, that Microsoft is going to offer the Surface for $199 when you sign up for a TBD (to be determined) subscription of some sort.”

However, we have serious doubts about a low-priced Surface tablet. Our main concern is about the subscription: what kind of subscription does Microsoft have to offer? Also, if Microsoft wants to maintain its symbiotic relationship with its manufacturers (and we mean PC manufacturers, here) it needs to think twice about how it will cut and undercut its partners and future competitors in price.

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