[Microsoft Surface] e.mote:
The Case for the $200 Surface RT Tablet

So we've heard about rumor. Along with the arguments. The prevailing chatter is that it's "too good to be true," that MS wouldn't be dumb enough to lose its shirt selling the RT tab for well under its cost, that it would damage its "brand image," that it would antagonize its partners, etc. etc.

All with good common sense, to be sure. We should heed the conventional wisdom of never selling below cost, and never upsetting our business partners, no?

It's also the conventional wisdom that Win RT, as version 1.0, will be buggy--against the polished, popular, and entrenched iPad. It's conventional to think that with a handful of apps, RT can't compete with iPad's established ecosystem. And it's very conventional to think that a "normally" priced Surface RT (same as iPad 2 or 3) will surely fail because of all these disadvantages. Again, conventional wisdom.

So, if following conventional wisdom, RT is doomed to a sure failure. And how much money will MS lose if RT fails? Would MS even survive if its touch initiative fails? How much money is MS' survival worth?

That's really the question to ask. Rather than worrying about a petty pittance of a loss leader, we should ask, how can MS succeed in its competition against the iPad. See the forest, not the trees.

There's one surefire way to sell tablets, no matter what the disadvantages: CHEAP. HP has proved it with the TouchPad. Amazon and Google did the same for the KF and N7. So MS will lose a few millions, or tens or hundreds of millions in a $199 Surface RT. Ask: Would MS lose more if RT fails? If MS itself fails?

How much did MS pay to Nokia to prop up Windows Phone? A few BILLION dollars? Is WP more important than RT? How much did MS invest in B&N Nook? A few HUNDRED MILLION dollars? Are ebooks more important than RT?

That's what the $199 Surface RT tablet would mean: An investment in MS' continued survival.

Now, to cover some of the arguments raised against it:

. It would damage its "brand image": As of now, Surface has no image to uphold. It's a new brand. And before you worry about "image" so much, think of the damage if Surface flops, just as all of the prior like-priced Android tabs that flopped. Should we worry about the brand image of the Zune? Or Kin?

. It would upset OEMs: And...what? They'll abandon Windows to support other platforms? Like they've ALREADY TRIED with Android, and Linux before that? Where else are they going to go? Apple?

People raised the cliched argument that you can't compete against your partners. It's bollocks. Businesses compete and cooperate with each other all the time. The term is coopetition. Look it up. (also try: frenemy). MS would not be alone in this. Google has already done this with the Nexus 7, and the Motorola acquisition.

As of now, there is no market for Windows RT. You can't have competitors if there's no market. Someone has to establish a market, and it can only be done by MS. Selling the Surface RT for $199 is one good way to do that.

This isn't to say that the $199 RT tablet will, or should happen. But it's a plausible option, and one I'm sure MS is pondering upon. Regardless of whatever failings it may have, MS still has good enough management who can see the forest, and ignore the hoi polloi worrying about a few measly trees.