It's an interesting theory, but Google's experience with Android tablets suggests that it needs a flagship device at a popular price to take off. And in the luxury sector, that price leaves little room below Apple, whose tablets are perceived as the gold standard.

Also, perusing recent announcements, OEMs don't seem to have much interest in going for lower prices. I guess the cheaper tablets will come post-launch, but they'll be on the defensive against Android tablets.

i think that’s the point most people are missing. while i personally would have liked to see it priced a bit lower (starting at $400 - $450 would have felt about right to me), i can totally see why they didn’t and i think those arguing for a lower price are being too short-sighted. this isn’t just the launch of a single device, it’s also effectively a launch of a new platform, and the success of the latter is far more important..

as they said from day one (and as i'm sure they were repeatedly emphasizing to their hardware partners over the past few months), they aren’t going to undercut OEMs on price. which makes total sense. they’re not Apple; it’s going to take more than one device to grow the platform and they’re playing to where they always play in the market: offering Windows on as wide a variety of devices and form-factors as possible (now also including some built in-house). undercutting other offerings may have boosted Surface sales in the near-term, but overtime it would have probably crippled broader adoption of Windows RT by alienating the OEMs that are critical in pushing it.

the general argument for a cheap(er) Surface RT is that it’s needed to help grow the Windows Store. while i think it would help to some extent, most of that comes in just the fact that it’s out there, as a flagship device, representing the platform in the market. i think their approach of relying on the large (soon-to-be) Windows 8 install base to incentivize developers is a far sounder strategy for building it out.. even at a lower price point, a few million additional Surface RT units (maybe) aren’t going to have as large of an impact on demand for Windows Store Apps as the hundreds of millions of devices that will eventually be running Windows 8; what it would have done though is likely alienate the OEMs that would otherwise be pushing those sales, and eventually Windows RT sales down the road.

The Surface Pro may be coming out 3 months later but there will be full fledged Windows 8 devices from other companies in November.

Not sure what your definition of "that much money" is :-)

The margins are estimated to be ~37% - ~50% depending on the model. http://www.isuppli.com/Teardowns/News/Pages/New-iPad-32-GB-4...

Those estimated margins aren't as high as iPhone (http://www.isuppli.com/Teardowns/News/Pages/iPhone5-Carries-...) but are still pretty damn good :-)

> Apple doesn't make that much money on the iPad

Hmmm... I might be wrong, but I thought they have HUGE margins. You know, like 40%? Keep in mind that the most popular iPad, 32GB 4G is $729. The $499 model is not the most popular one (at least according to the analysts).

$100 cheaper than an iPad with equivalent storage, but if customers compare the base model of each, they're the same. Not to mention that Apple's website offers the previous model for $100 less.

iPad 2 can be bought from $399, and the $499+ iPads have a Retina display, this is only 1366x768.

We'll have to wait and see if a big part of that storage is not used by the Windows OS, which is much larger than iOS, unless they don't count that storage, but they might.

Also, it still has a regular resolution. I would expect at least a 1080p resolution at that price. The 9" Kindle Fire has one, and it sells for $300. That's $200 difference,and the Surface still doesn't have that high of a resolution.

$100 more expensive than an iPad 2.

iPad and Android will get Office in spring, too, and it will probably cost $30 at most, otherwise no one will get it, and moving them to these 2 platforms would have been a pointless exercise.

But I still fail to see how this is a major selling point on a tablet. I'm sure Quick Office and Apple's office suite provide more than enough functionality for most people, and an experience that isn't too cumbersome.

But what bothers me most about it when people mention this is that they seem to think that because it has Office, it just washes away all the app advantage that the iPad or even Android have on tablets. And that's nowhere near being true. The Surface does have a lower value because of lack of apps, and that should be reflected in the price. There's little reason in getting a $500 Windows RT tablet over a $250 Nexus 7 (half the price, same performance).