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The $499 price means Microsoft will not make any real margin on the Surface.

So Apple is making a killing selling the iPad for $499 but Microsoft is making no margin on the Surface RT at the same price? Is Apple's supply chain really that much more efficient? If Microsoft can't even make money at price parity with Apple what chance do they have in this market?

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I don't know the particulars of the MS supply chain vs Apple. However, I would assume that Apple's chain is rather tight with few loose/weak links. They've been in the game for more years than Microsoft. MS never really made hardware devices like this. The Zune was never popular enough to have the supply chain around it that Apple had with the iPod family.

Of course xbox has been made with such a model but I'd agree that it never has that price pressure that surface has.

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