Microsoft Sets Surface Tablet Pricing at $499

The much-anticipated Surface tablet from Microsoft now has a price tag of $499 to start as the software giant makes its foray into the tablet market in competition with its OEM partners.

Microsoft has finally revealed pricing for the Surface tablet computers that will go on sale Oct. 26 but are available for online preorder now, starting at $499, a price in line with that of Apple's iPad, the king of the tablet hill.

Microsoft on Oct. 16 posted on its Website specifications and pricing for the Surface, the first tablet device with hardware and software both made by Microsoft. The $499 Surface comes with 32GB of internal memory but without the Black Touch Cover, a feature that covers the screen when the computer is off, but acts as an attachable keyboard when the computer is in use.

For $599, the 32GB Surface includes the Black Touch Cover. The $699 model doubles memory to 64GB and includes the Black Touch Cover. Covers in white, cyan or magenta are also available.

The release of Surface pricing coincides with the release of the first TV ads for the product, which seem to pay homage to the TV show "Glee."

At $499, Surface seems to be targeting the Apple iPad, whose $499 entry-level model offers only 16GB of memory. A 32GB "New iPad" sells for $599 and a 64GB model for $699.

Surface pricing may give some comfort to Microsoft's original equipment manufacturer (OEM) partners irked at the software giant for going into competition against them. The thinking is that they could come in with more modestly priced tablets running Windows 8 that could compete against rivals from various manufacturers running the Google Android operating system as well as the Kindle Fire, based on a variation of Android.

"We were expecting $499, but were hoping for $399," said Carolina Milanesi, a Gartner vice president. With Surface starting at $499, though, OEMs could sell their Windows tablets at $399 or less and gain more mass market adoption than can Surface.

"For Microsoft, Surface is a way to show off Windows 8 and … create enough buzz around Windows 8 tablets that the partners can benefit from different price points," Milanesi said.

But pricing alone won't determine the success of the Windows 8 device market, she added. Its success depends on the quality of the hardware from Microsoft and the OEMs and the vibrancy of the application ecosystem around the devices, which is still evolving.

But Microsoft may have overshot the market with $499, according to Charles King, senior analyst at Pund-IT Research.

To be sure, Microsoft offers a 32GB Surface for the same price of a 16GB iPad and offers the attached Touch Cover on the higher-end models that one would have to pay extra for on an iPad. But is that all there is?

"Overall, I find that underwhelming," King said. "Given how late Microsoft is entering the [tablet] game and the competitive strength of the iPad, I expected the Surface to be priced considerably more aggressively."

The Surface and other tablets going on sale first will be running Windows RT, the version of Windows 8 for devices with ARM processors. Later on, Microsoft will release Windows 8 Pro for devices using x86 processors.