Microsoft Cuts Surface Tablet Price to Spur Demand

The price for the standard Surface RT tablet which lacks the soft cover doubling as a keyboard fell to $349 from $499.

Technology giant Microsoft has cut prices on its Surface RT tablet as it struggles in a highly competitive market dominated by Apple’s iPad, Amazon’s Kindle and a slew of low-cost devices running Google’s Android operating system.

On the company’s Website, the price for the standard Surface RT tablet, which lacks the soft cover doubling as a keyboard, fell to $349 from $499, while the version that includes the keyboard dropped to $449 from $599. Both versions offer 32GB of storage, while the Surface tablet with double the memory saw the price drop to $449 sans a keyboard cover, and $549 with the cover included.

"We've been seeing great success with pricing and cover promotions over the past several months on Surface RT in the U.S. and other markets," a Microsoft spokesman told The Wall Street Journal. "People who buy Surface love Surface, and we're excited about all those additional people out sharing their excitement for Surface with other people."

Microsoft sold 900,000 of the devices in the first quarter of 2013, according to a May report from IT research firm IDC, and the report noted many of those units were Surface Pro, which the company started shipping to the United States and Canada in February. Beyond the Surface products, Windows 8 and Windows RT tablets continue to struggle to gain traction in the market. Total combined Windows 8 and Windows RT shipments across all vendors reached 1.8 million units, the report noted.

In comparison, Apple outperformed IDC's most recent projections for the quarter, shipping 19.5 million units compared to a forecast of 18.7 million units. No. 2 vendor Samsung also performed above expectations and managed to grow its shipments over the fourth quarter as more of the company's smaller-sized tablets began to gain traction in the market.

In a bet that enterprises will snap up Surface slates with strong channel support, Microsoft recently launched a business channel expansion aimed at luring corporate IT departments. The company announced the Microsoft Devices Program in June, a move that could potentially help boost enterprise adoption of the software giant's in-house line of Windows 8 and RT tablets.

Apart from making it easier for corporate buyers to purchase Surface tablets, the program allows resellers to bring a variety of "value-added services to the Surface family such as asset tagging, custom imaging, kitting, on-site service and support, device recycling and data protection."

Worldwide tablet shipments are expected to grow 67.9 percent in 2013 as anytime, anywhere computing drives buyer behavior, according to a June report from IT analytics firm Gartner. The share of basic tablets is expected to increase faster than anticipated, as many consumers shift from premium tablets to basic tablets. For example, sales of the iPad Mini already represented 60 percent of overall iOS tablet sales in the first quarter of 2013.

"The increased availability of lower priced basic tablets, plus the value add shifting to software rather than hardware will result in the lifetimes of premium tablets extending as they remain active in the household for longer. We will also see consumer preferences split between basic tablets and ultramobile devices," Ranjit Atwal, research director at Gartner, noted in the report.