Apples-to-Apples

I have a couple problems with Marco’s latest post. First, he implies that Microsoft is “tricking” people by pricing the 32GB Surface at $499:

It’s far easier for the Surface to appear to be cheaper than the iPad by starting at 32 GB than by starting at $399.

The Surface doesn’t “appear” cheaper, it is cheaper. Marco is right, Apple arbitrarily prices its storage in $100 increments. Microsoft is selling you tablet storage cheaper than Apple is. Simple.

Second, Marco maintains that the Surface is expensive:

A Kindle Fire is $159. A Nexus 7 is $199. An iPad is $329. A Microsoft Surface is $499.

Apple’s been selling midrange and high-end products at midrange and high-end prices for years, trying to get people to compare (sorry) apples-to-apples, but it just doesn’t sink in: Apple still has an “expensive” reputation, mostly because they don’t address the unprofitable low end of any market.

The Surface is a decent deal, but it is also expensive: not compared to the iPad at the same storage level, but relative to the market. That’s what customers see, and that’s how the Surface will be compared.

The problem is that he’s comparing the 10.6” Surface to a bunch of 7-8” tablets. I agree that specs are increasingly becoming insignificant, however, the screen size of a tablet is the one spec that customers clearly recognize and associate with value. Customers understand that there are “big” tablets and “small” tablets. They are willing to pay more for the big ones. And that’s fair. Marco’s apples-to-oranges comparison isn’t fair. Is $499 an expensive price in general? Maybe. But, when people say the Surface is expensive, they don’t mean that $499 is a lot of money, they mean that the Surface costs more than similar products. That’s not true.

A 32GB Kindle Fire HD 8.9” is $369. A 32GB Nexus 10 is $499. A 32GB Microsoft Surface is $499. A 32GB iPad is $599.

One Apple is more expensive than the others, and it isn’t the Surface.