Microsoft Slashes Surface RT Prices


Microsoft chopped the price of its Surface RT tablets 30 percent Sunday, bringing the entry-level, 32-GB model to $350. The price drop was spotted at reseller sites such as Best Buy, Staples and Microsoft's own site over the weekend. Microsoft also dropped the price of its 64-GB Surface RT from $600 to $500 (a 25 percent price reduction).

It's believed the move is an attempt by Microsoft to get rid of existing Surface inventory to make room for newer Surface models with beefier processors and better battery life expected to be released this fall. Microsoft Surface RT sales have been dismal since the tablets were introduced last October. In March, Bloomberg reported Microsoft had sold only 400,000 Surface RT tablets against an order of 3 million and said it had hoped to sell 2 million in the last quarter of 2012.

Blake Schwank, CEO of Colorado Computer Support in Colorado Springs, said he isn’t surprised Microsoft cut Surface's price tag. “Windows RT is the problem. It’s got a nice interface like Windows 8 but you can't run a lot of the legacy business apps that customers need on Windows RT," Schwank said. "Surface might be OK for general users looking for a nice tablet, but for business users, it's just not an option.”

In June, Microsoft dropped prices of the Surface to K-12 schools by 60 percent and it recently launched a special, giving away free keyboard/covers to Surface customers who bought the tablet before June 30. Last week at the Microsoft Worldwide Partner Conference, it slashed the price of the 64-GB Surface to $100 for attendees.

[Related: U.S. Solution Providers Still Left Out Of Microsoft Surface Strategy]

The 32-GB Surface RT (at $350) is being sold at just $65 above cost, according to an iSuppli analysis of the material and manufacturing costs, which estimates Microsoft's cost at $284.

The news comes on the heels of Microsoft's Worldwide Partner Conference, where Microsoft partners complained about its new Microsoft Devices Program. The program would limit Surface channel sales to Microsoft's largest distributors CDW, CompuCom Systems, En Pointe Technologies, Insight Enterprises, PC Connection, PCM, Softchoice, Softmart, SHI International and Zones.

Last month, Bloomberg reported that Microsoft was readying the release of new Surface RT models based on Qualcomm's Snapdragon processors (replacing Nvidia Tegra 3 chips) that would allow new models to offer LTE wireless connectivity.

PUBLISHED JULY 15, 2013