Microsoft shouldn't just look at the iPad, it's short-sighted. The reality is that Android has become the most common OS on smart-phones and both Google and Amazon are subsidizing tablets so that lots of people are able to buy their first ones with Android cheaply.

When it's time for these people to buy their second tablet, which one do you think they will choose: a Surface, an iPad or one of the many available ones with the OS they know? A classical Microsoft strategy turned against them.

It's not enough to compete with the iPad on price. If Surface is cheaper than the iPad, but the Kindle Fire and Nexus 7 are cheaper than both of them, people will buy the Android ones, and probably no feature will change that.

Apple is comfortable with their first-mover advantage and respected brand, they can continue selling devices with high margin profits to people with disposable income as long as they don't damage their brand with a poor product.

Companies using Android are comfortable selling in bulk and making tiny profits with each device.

Microsoft cannot be Apple, they are entering the market almost three years late. They should compete with Android subsidizing heavily their tablets or risk becoming a niche product on this segment, as Windows Phone.