According to some experts, Microsoft’s Surface devices are priced in a range comparable to low end PC’s as opposed to devices such as the Google Nexus 7 and Apples iPad. Estimates suggest that the tablets will be placed between USD 399 and USD 499 and will be in the same price range as the Apple iPad and iPad mini, which is due to release. This high costing will hurt Microsoft, if it intends on eating into Apple’s iPad market.
Sameer Singh, an Indian analyst with Finvista Advisors, estimated the mentioned price tag by comparing the bill of materials for the device. Although not official, the analyst has made intelligent judgements as to what the prices of the components could be, based on what they cost for other similar devices.
Singh arrives at a USD 399 figure by assuming a 23 percent profit margin for Microsoft after adding up resources, which pushes the price tag of the Surface tab to USD 309. With a USD 10 manufacturing cost per device, Microsoft would stand to earn a 38 percent profit if the device was priced at USD 400.
According to some industry experts, Microsoft will have to keep a cordial relationship with hardware partners and will have to match their prices rather than undercutting them, as a result, if the software giant intends of taking a bite out of Apple, they would need to come up with a better product for the same price or undercut themselves.
