Microsoft will most likely release a second generation Surface RT this fall, but will consumers be interested?
Buying version two of a product is almost a universal rule for consumers. This is true for Microsoft (MSFT) and its Surface RT. When Surface “2.0” is released, possibly next month, the success of the tablet could be better this time around.
What went wrong
Microsoft may have over-estimated the value of dividing tablet options, by offering a fully functional “Pro” and a basic “RT” model. Microsoft was so sure that RT would be a success that it built too many of them, only to have to write them down last quarter. Sales were further constrained, when the device was only available online and at Microsoft stores.
The high starting price did not help initial sales. Original equipment manufacturing (OEM) partners also felt they could try to charge for the RT at even higher prices. Lenovo’s Yoga RT and ATIV’s tablet sold for around US $750.
What could be different with Surface 2
OEM partners appear to have learned from their mispricing of the Surface. During the holiday season, Toshiba and Asus are planning to release fully functional Windows 8 tablets for as low as $349. The Asus T100 tablet will have 11 hours of battery life, run a full version of Windows 8, and will cost $349. The device is powered by a new Intel (INTC) quad-core Bay Trail Atom processor.
The share prices of HP, Intel, and Microsoft could benefit from stronger sales, with Windows 8.1 and low hardware device costs acting as a catalyst for stronger PC demand:
Click on the interactive charts below to see data over time. Sourced from Zacks Investment Research.
Written by Chris Lau.
© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.
Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.
Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.