Newsletter Issue #664: So Why is the Media Still Taking Microsoft Seriously?

August 20th, 2012

This week, some online pundits speculated about the possible pricing for Microsoft’s ARM-based Surface, which will run Windows 8 RT. This is the model that appears to be most directly competitive with the iPad, at least based on the preliminary specs that, a little over two months from the alleged release date, still remain preliminary.

One story had it that Microsoft was hot for market share, and thus would sell this 10.6-inch tablet for $199, to compete with the Amazon Kindle Fire and the Google Nexus 7. But that’s not a story that I can take seriously.

Just consider the bill of materials. Amazon and Google are selling their 7-inch models with little or no profit. The Surface, assuming it is as represented, will cost a whole lot more to build. It’s not just the 10.6-inch display, but providing a cover with built-in keyboard. Sure, I suppose it’s possible Microsoft would consider taking a $100-$200 loss on every unit sold to build market share, but I’m skeptical.

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