Analyst says Surface too expensive, gets some facts wrong

Despite Microsoft's Surface tablet being priced $100 cheaper than an equivalent Apple iPad, one analyst says the upcoming Microsoft tablet is too expensive.

Shaw Wu of Sterne Agee spoke with the Wall Street Journal's Digits program and compared the Surface RT tablet to Microsoft's failed Zune line of portable music players and the company's Kin feature phone blunder.

"We think this new Surface tablet that they're doing is actually quite interesting," Wu began. "[Such as] the innovative cover keyboard – the cover doubles as a keyboard – but we think what could end up hurting it is the high price point. They're talking about starting it as $499, and then $599 with the innovative touch keyboard, but the problem is you've got Google and Amazon pricing their tablets at only $199, less than half [of Surface's starting cost]."

Though Wu disagreed with the pricing, he made no mention of the fact that the least-expensive Surface is actually less expensive than the current iPad model with the same amount of storage.

Wu added that the Zune failed because it was priced on par with Apple's iPod line. In reality, however, the Zune music players were typically $50 less than the equivalent iPod, a gap that was later expanded even further with price cuts.

When asked about today's iPad event, Wu said the announcement could have a major impact on Surface's success.

"Right now, the vendors out there, including Microsoft, have a tough enough time competing against a $399 iPad 2. With the potential iPad Mini being priced at $299 or $349, which is obviously the lowest price point they've ever done, it's going to make it even though for Surface to do well," he said.

Source: The Wall Street Journal

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