Microsoft's (MSFT) Rapid Attempt to Go 'Premium' Will Be its Demise

December 14, 2012 10:22 AM EST
To the casual observer, shares of Microsoft (Nasdaq: MSFT) are lower on the session Friday. To the trader, the same.

Digitimes reports that Taiwan-based vendors might have a little to do with the negativity today. According to their sources, Microsoft's Windows RT Surface tablets are a "hard to sell."

The vendors cite the higher price of surface tablets versus Google (Nasdaq: GOOG) Android-based models and lack of applications. How much more? About twice as much.

According to the report, first-tier 10-inch Windows RT tablets go for NT$20,000 (about $685). Comparable Android-based NVIDIA (Nasdaq: NVDA) Tegra 3-chipped models about about NT$8,000 to NT$10,000 less.

Digitimes also notes the Windows Pro Surface will retail for NT$26,000 in January, making that an even tougher sell.

Basically, no one is really seeing the value of a Windows RT tablet. Microsoft was ambitious with its venture and the Surface line is, by many accounts, a killer machine. But, it's also just a really thin PC: it has a massive processor, full OS, and other bells and whistles that make it incomparable to offerings from the like of (Nasdaq: AMZN), Apple (Nasdaq: AAPL), and Google.

While Apple has spent the last few decades as building itself as the consumer electronics maker that isn't for everyone, Microsoft has generally taken the opposite approach with Windows. Now, Microsoft is trying to sell itself as a premium product in its first PC offering ever, coming off of tepid sales of an all-but-forgettable smartphone operating system. Did anyone expect this approach to work?

A smarter move would have been to build something like a larger smartphone, just about what everyone thought the iPad was all about when it debuted a few years back. The tablet, with a lower price, would have reached more hands, putting more and more users on Windows 8, and doing so at a more achievable price point.

It's hard to say sell Microsoft given its established user base and relatively good dividend. Investors should be cautious moving forward as more reports "surface" that Microsoft's flagship device is falling "flat" on investor demand.

Shares are down 0.6 percent on the session.

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why compare premium tablet with cheapest Android?
Luc on 2012-12-14 17:13:35
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Makes no sense to compare premium Windows 8 tablet to cheapest Android tablet. There are plenty of cheaper Windows 8 tablets (e.g. Acer W510).
Also why not compare to iPad?

So Microsoft will go bankrupt because of introducing one premium tablet?

Also what is rapid about it?

Taiwan-based vendor said....
Rich on 2012-12-14 11:56:45
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As far as I know Surface is not avaiable in Taiwan, I don't know why an vendor ever said anything about sales. In fact I've been waiting for them to release a Traditional Chinese (Taiwan) Touch Cover.

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