The success of Android tablets and the iPad leaves Microsoft’s Surface "stuck between a rock and a hard place", according to Motley Fool analyst Eric Bleeker.
Motley Fool senior technology analyst Bleeker was speaking on rumors that Microsoft could lower the price of Windows 8 licenses on tablets to OEMs to just $30, and suggested that the Redmond giant may have been forced into such decision following tough competition with Google and Apple.
“Microsoft is cutting licensing costs but what you have to think about is the rock and hard place that Microsoft is in the tablet space,” said Bleaker.
“At one end you have Android, a relatively proven platform, selling down to $100 and $200 and at the other end is Apple. And you think about the iPad mini for a second and that starts selling at $329.”
With prices falling lower in the tablet market all the time, Bleaker -- who dismissed suggestions Microsoft could compete in the 7-8-inch tablet space -- says that Microsoft got it wrong with the Surface when it came to the price.
“The problem with Surface was that it was priced a bit too high,” said the Motley Fool analyst. “If you look at the initial price of $499 for the entry-level Surface, you need an extra $100 for the keyboard which is a near necessity.
“And following the Surface we haven’t exactly seen a flood of Windows 8 tablet interest, partly because of the Windows expense licensing model.
“So you can see how it’s going to be an uphill struggle for Microsoft in this segment.”