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Microsoft Cuts Surface Tablet Prices by $150

Microsoft Cuts Surface Tablet Prices by $150
By Barry Levine

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The $150 price drop for Surface tablets comes on the heels of reports that Microsoft's Surface team is now prototyping wrist-worn devices -- that is, smart watches. Reportedly, the smart watch development effort includes members of Microsoft teams who have worked on the Kinect gestural controller and on Xbox accessories.
 



Microsoft's Surface tablets are getting a major price cut. This week, the technology giant announced a $150 reduction in the price tag, which amounts to as much as a 30 percent drop.

The current price will be around $349 for the entry model Surface RT, plus the optional keyboard cover. When the Surface RT originally launched in the fall of 2012, it cost $499 without the keyboard. The higher-end Surface RT with more memory is also getting a price drop, from $599 to $449.

A Microsoft spokesperson told news media that the company has "seen great success with pricing and cover promotions over the past several months on Surface RT in the U.S. and other markets." Previous promotional discounts have included a free cover/keyboard, which can cost as much as $129.

Disappointing Sales

The ARM-processor-based Surface RT tablet has sold poorly, which has been attributed to a variety of reasons. These include confusion about what applications the RT version of the tablet actually runs, as it won't handle legacy Windows software.

Among those citing the Surface RT sales as being "disappointing" have been the chief executive of visual computing technology provider Nvidia, who said so in March.

Avi Greengart, an analyst with industry research firm Current Analysis, told us he was "not surprised" at the price drop. He noted that "the product has been on the market for a while now, and even if sales were booming Microsoft might drop pricing on a normal upgrade cycle." There have been reports that Microsoft executives showed a slide at a conference last week about updates for Surface RT and for the Intel-based Surface Pro, but so far no new models have been announced.

Greengart said that "all of my sources indicate the Surface RT has not been selling well," but he added that Microsoft "is absolutely going to continue investing" in tablets, including its RT tablet.

Smart Watches

The price drop for the Surface RT comes on the heels of reports that the Surface team is now prototyping wrist-worn devices -- that is, smart watches. Reportedly, the smart watch development effort includes members of teams who have worked on the Kinect gestural controller and on Xbox accessories.

In April, news reports indicated that Microsoft had requested 1.5-inch displays from component manufacturers. There have also been rumors that the watch will include a five pin-magnetic power connector that transmits both power and data, similar to the one used on the Surface tablets. The watch reportedly will utilize a distilled version of Windows 8, will have a removable band available in several colors and will be made out of translucent aluminum.

Given the many rumors about smart watches, including possible releases from Apple, Samsung, and others, it would be surprising if Microsoft was not working on a smart watch. The key question is to what degree the company's smart watch line will build on Windows 8 or will relate to the Surface tablets.

In 2004, Microsoft sold smart watches that used radio signals to receive news and information, but those were discontinued in 2008.
 

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