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They have priced the devices way too high. Microsoft has been mostly successful before when started with low end products to build market share, got market feedback, and iterated over the years to iron out the kinks, and then moved up the chain eventually.

Apple has been in the premium product game for their whole life and know how it work. Microsoft needs to stick with their strength and avoid their weakness.

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They priced it competitively with the product they were fighting. But now its prices way less than iPad. iPad - $500 Surface RT - $350

IPad is already in its N-th iteration. What was Microsoft thinking that it could pitch an alpha/beta product against Apple's mature product head-to-head?

Pricing it low initially gives value to the users and they would be more forgiving of its shortcomings. It at least creates market share and momentum.

Priced it high initially and then low it is the worse marketing approach. The initial high price kills market penetration, and the subsequent price slash creates a sense of desperation and signals something is wrong with the product.

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