Obviously at the price they're asking for it, it isn't for anyone. $1 billion in unsold inventory is a statement to that fact.
What do you think about the price?
- Thread starter ZombieBacchus
- Start date
Microsoft can charge whatever it wants to as well. As you stated as long as people are willing to pay. I don't care if Apple has a mature system because it doesn't benefit me. I wouldn't want to buy an ipad because to me it's expensive but I will fork money to buy a SP2 because it benefits me. I just think this argument is getting old. Value is in the eye of the beholder.
$900 million is a fraction of the unsold inventory. That amount was the devaluation when they dropped the price by $150. Now, I realize it's more complicated than this, but that's the basics. But the original value of the unsold inventory was probably more like $3 - 4 billion.
Assuming it cost $275 and they are selling it at $449, That's 44% margin, which really isn't that high in the electronics world, unless you are talking about the bottom feeders. I am a digital hardware engineer that develops electronic products for a living and know how this goes.
So, there is the question of what a reasonable selling price is and that's really up to Micorsoft and the market to decide, but... Obviously, there is manufacturing costs. There also has to be payback for NRE in developing the HW and SW. EROI can't be zero or your company can't afford to develop products. There is marketing costs, and these costs can't be zero or you would never even have access to the product in the first place. If MS doesn't market well, the product won't be developed and won't be good to you. There is sales cost, it doesn't magically appear in your lap when you pay the money, that costs money. Then, there is a sustaining cost, because you know that as soon as there is noise about GDR whatever, everyone will be clamoring on here for it.
So, assuming your $275 cost to build, the margins are still pretty low with all the other associated costs and might even be close to break-even. For the quality of product, the Surfaces are well priced. You want to bottom feed, there are these $299 Atom tablets popping up from Acer, Asus, whomever. It is not personally worth it to me to buy a product that has been cost-reduced to the point where it barely works (had this experience with a cheapo bottom rung Dell, never again). I have purchased products like this before and always regretted it. I will happily pay a bit extra for a good, quality product over a lower quality cheaper alternative. I don't shop at Wal Mart. Sick of junk.
So, there is the question of what a reasonable selling price is and that's really up to Micorsoft and the market to decide, but... Obviously, there is manufacturing costs. There also has to be payback for NRE in developing the HW and SW. EROI can't be zero or your company can't afford to develop products. There is marketing costs, and these costs can't be zero or you would never even have access to the product in the first place. If MS doesn't market well, the product won't be developed and won't be good to you. There is sales cost, it doesn't magically appear in your lap when you pay the money, that costs money. Then, there is a sustaining cost, because you know that as soon as there is noise about GDR whatever, everyone will be clamoring on here for it.
So, assuming your $275 cost to build, the margins are still pretty low with all the other associated costs and might even be close to break-even. For the quality of product, the Surfaces are well priced. You want to bottom feed, there are these $299 Atom tablets popping up from Acer, Asus, whomever. It is not personally worth it to me to buy a product that has been cost-reduced to the point where it barely works (had this experience with a cheapo bottom rung Dell, never again). I have purchased products like this before and always regretted it. I will happily pay a bit extra for a good, quality product over a lower quality cheaper alternative. I don't shop at Wal Mart. Sick of junk.
I totally agree. $1 billion in unsold inventory is evidence of how much the original RT/Pros are valued.
So, it's cool when Microsoft loses billions with the Xbox, and it's considered a successful product, but they can't sell a $275 product for $350 to gain marketshare because it's "made of premium parts," and "the marketing is too expensive." Really? Look, I realize you like the Surface. You bought one (or want to buy one,) and you want to defend you choice. I don't understand that mindset. I don't give a damn what anyone thinks of my choices, and don't try to justify or validate them to strangers, or friends and family, for that matter. I just don't care about their opinion of my choices. It's my money, I'll buy what I want.
You're reading what I'm writing as trolling, or trashing Microsoft. That's not my intention. I make my living using Windows. I want them to stick around. I'm writing out of disbelief and frustration at the sheer stupidity, incompetence, and hubris of Microsoft's leadership and marketing division when it comes to anything that's not Windows/Office. They don't get it. They don't understand that no one but PC gamers, alpha nerds (you, me, and everyone on this forum,) fanboys (you,) and old IT/Sys Admin guys (me) even like Windows. They've had a captive audience for 20 plus years, and think all the grandmas and Joe Sixpacks buy computers with Windows on them because they want Windows. Wrong, wrong, wrong. They bought those computers because they were the cheapest ones they could find at Walmart or BestBuy that would let them get on the internet to use Facebook and email. The fact that they had Windows on them doens't matter in the slightest. Period. They don't give a damn about PC gaming, running Audacity, running Photoshop, or anything other that the Big Blue E to get to Facebook (or Firefox, if they're lucky enough to have a kid to install it for them.)
Microsoft obviously wants to sell phones and tablets. They wouldn't make them if they didn't. Why is it so hard to them to figure out that they can't come to the game 3 years late, and expect to sell at Apple profit margins because "Windows." They've seen the light with the phones (Lumia 520's are selling like hotcakes. Well everywhere except America.) Will they come to their senses before they throw in the towel ala the Zune? Hell, hire me, and I guarantee I can sell more of the things than Ballmer. It's so damn obvious.
We get. You believe the surface brand is too expensive. It's not for you. It doesn't matter how cheap or expensive something is, if we see value in it, we buy it. There are other brands out there that may suit your needs...i.e iPad. Even Panos stated, surface isn't for everyone
You don't get it. This isn't about "you." It's about the success of the product line, *****. It's too damn expensive, period. It's not going to sell at iPad prices because it's not an iPad, and Microsoft needs to realize that.
@JKing106
Your opening paragraph is condescending and presumptuous. You then tried to tell me what my thinking is.
I was just trying to explain pricing, not be a cheerleader or call you a troll. People seem to want to look at raw component costs when that is no where near the total cost to produce a product. I design products for a living; I see where the costs are. Just explaining that.
If MS prices like the cheapo tablet products they will lose money and be considered crap. Why go bottom feeding and leave money on the table while destroying your brandname? It won't help the platform in the long term. Making a good product will, and Microsoft is playing a long-game, like they always do. I do doubt that MS is getting Apple's margins on Surface.
My decision to buy a Surface or any other tablet or gadget will never make any rational, defensible financial sense anymore than my decision to buy Forza 4 did because it is just a want that doesn't serve a purpose other than being what I want; a luxury.
Your opening paragraph is condescending and presumptuous. You then tried to tell me what my thinking is.
I was just trying to explain pricing, not be a cheerleader or call you a troll. People seem to want to look at raw component costs when that is no where near the total cost to produce a product. I design products for a living; I see where the costs are. Just explaining that.
If MS prices like the cheapo tablet products they will lose money and be considered crap. Why go bottom feeding and leave money on the table while destroying your brandname? It won't help the platform in the long term. Making a good product will, and Microsoft is playing a long-game, like they always do. I do doubt that MS is getting Apple's margins on Surface.
My decision to buy a Surface or any other tablet or gadget will never make any rational, defensible financial sense anymore than my decision to buy Forza 4 did because it is just a want that doesn't serve a purpose other than being what I want; a luxury.
No, you don't get it. You're making this about you. About a misguided narcissistic need to defend your purchase This is about the success of the product line. Microsoft is asking too much in an arrogant attempt to make Apple profits on a product that's years too late, with an app store that is pathetic in comparison to Apple's, and even Google's, because they mistakenly think people will buy it because "We're Microsoft! We sell tons of OEM Windows and Office licenses, so people must love us!" How many RT's went unsold again, until they dropped the price to $350? How many of those have sold? Do a little research, and you'll see the refurbs on Ebay that went for $200 with the touch cover included sold out in minutes. Why do you think that is?
iPad 32GB is $599
Surface 2 32GB is $449
iPad 64GB is $699
Surface 2 64GB is $549
Hardly iPad prices. It costs $150 less.
Why does everything have to be cheaper than Apple? Its not about me. So should Microsoft start lower, then raise the price later. Its a premium product and is being sold that way. I don't think the verdict is out at this time. As others have stated there is no rational to buying anything.
Exactly. A lot less people saw the value in the Surface RT that Microsoft saw. That's why they sold about 25% of what they expected to sell.
i'm not sure why this has gone on for seven pages. even though i'm buying a surface 2 and a pro 2, both are overpriced.
why?
the hardware is top notch. the reason the hardware is overpriced isn't due to lack of quality hardware. it's because windows 8 can't YET offer the comprehensive experience that apple, for example, can. that's the problem. i love windows 8.1, but the apps and overall experience are still lacking on every platform. the ecosystem is still weak. that matters. if you want top dollar for your quality hardware, the software better be right better be right across all platforms.
microsoft has a lot of work to do and they've shown they are more than capable. the surface proves they can build better hardware than apple. bing maps shows that they can bet google at something that google really perfected. and microsoft has shown they can really innovate. 8.1 is impressive, imo. now they need to get third party developers on board. how do they do that? get surface into people hands and homes! give he hardware away if you have to. when you can offer a better or comparable experience and have convinced people of that, that's when you can go head to head on price. the market is there and microsoft has to pursue it, but i'm not sure they're willing to take the short term hit in order to gain significant future market share. consider any losses an investment.
why?
the hardware is top notch. the reason the hardware is overpriced isn't due to lack of quality hardware. it's because windows 8 can't YET offer the comprehensive experience that apple, for example, can. that's the problem. i love windows 8.1, but the apps and overall experience are still lacking on every platform. the ecosystem is still weak. that matters. if you want top dollar for your quality hardware, the software better be right better be right across all platforms.
microsoft has a lot of work to do and they've shown they are more than capable. the surface proves they can build better hardware than apple. bing maps shows that they can bet google at something that google really perfected. and microsoft has shown they can really innovate. 8.1 is impressive, imo. now they need to get third party developers on board. how do they do that? get surface into people hands and homes! give he hardware away if you have to. when you can offer a better or comparable experience and have convinced people of that, that's when you can go head to head on price. the market is there and microsoft has to pursue it, but i'm not sure they're willing to take the short term hit in order to gain significant future market share. consider any losses an investment.
You make some good points, but I am not sure I agree with giving the things away. With XBOX and XBOX360, the deferred reward was high-margin game sales, so could afford to go at cost on the hardware. I am not sure that they have this same model with Surface, unless it is getting it in to enterprise, which they are doing. With consumer tablet and phone sales, the money to be made is in selling the hardware/OS platform. I don't think MS is going to get rich selling 99 cent apps. But they do have a hill to climb in gaining market share and their seeming answer to that is giving away software.
SwimSwim
New member
Indeed, it's as Steve Jobs said so many years ago, "Apple doesn't care too much about building up marketshare. Our focus is on building great products that we can recommend to our family and friends, that we're proud to own. We'll try and make those premium products as affordable as we can, but we don't want to sell junk." Then, when Apple later unveiled things like the iPhone and iPad, that whole image of high quality and premium products really helped out. Say what you want about Apple, but they have one hell of a brand. At this point, they could literally sell crap and still make millions.
Now, Microsoft is trying to rise from the ashes of Vista and its legacy of viruses and the BSOD, to make a brand name image for itself. Panos even said, "I can't stress this enough, the Surface isn't for everyone. Surface is great for watching movies, sure, but we designed this product to help people get stuff done, to be productive, all in a high quality package. If that's not what you're looking for, I'm sorry, but this just isn't for you, and that's fine."
Daylife
New member
Yeah especially joining the tablet world years after the competition has been dominating....You really expected Microsoft to sell like Apple or Android? get real kid...Surface came out with a brand new App store that didnt have a whole lot. Look at it now, a year later. Its a huge difference.
I wouldnt take an iPad for free "and i owned one before" Because its crap lol, but hey thats my opinion.
Fanboyism is just narcissism, and to tie one's self esteem to an inanimate object or corporation is a mental illness. It's not a crime to admit something you like isn't perfect, or to criticize it in hopes the manufacturer will improve it. No one insulted anyone's mother, you know.
That's a pretty ridiculous statement, especially considering the situation of getting an iPad for free, it could easily be sold... And while the app store has most definitely improved, it still has a long way to go.
After the iPad mini retina announcement setting it at a $399 price tag to start, I wen't back on picking one up in favour of a Surface 2.
I swung by the Microsoft Kiosk to grab one, but after playing with the display model, I've decided to hold off again. The hardware is amazing; it's thing and light, and the new grey case looks great, but something still feels off about Windows 8.1 RT, so I think I'll wait a bit longer.
Daylife
New member
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