How Microsoft could make a $199 Surface RT a reality, and why it shouldn't
An anonymous source has told Engadget that Microsoft's ARM tablet, the Surface RT, will cost just $199 when it goes on sale on October 26th.
Cue much incredulity from the rest of the Internet. $199 would be cheap for a 10" tablet with 32 GB flash storage even if it were some plastic horror. Add in Surface's VaporMg finish, tight building tolerances, and Touch Cover keyboards, and the bill of materials is sure to be more than $199, and as such, Microsoft would be making a loss on every unit sold. Still, Microsoft could afford to sell Surface RT for $199. There are reasons why it might want to do so, and there are even realistic ways in which it could make up for that loss. But the negative effects of such a price plan would be enormous.
It goes without saying that Microsoft could afford to simply lose money on every Surface RT it sells. The company has enormously deep pockets. There is an obvious reason why it might want to sell the tablet for a loss, too. The market for touch-first, Windows 8-style (formerly "Metro-style") applications is currently zero, and Microsoft needs to change that, and fast, to stimulate application development. At $199, the tablet would be cheap enough that buyers might be willing to take a gamble and buy into the platform even without a proven application ecosystem.
