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Microsoft Corporation (MSFT): Will a Price Cut Make the Surface Relevant?

Taking market share away from Apple Inc. (NASDAQ:AAPL) would require offering a solid tablet experience on par with the iPad at a lower price point. Before the price of the Surface was unveiled, many expected the Surface RT to be priced lower than the iPad to give Microsoft a competitive advantage. When this didn’t happen, shoppers were left with a choice between an unknown tablet that was difficult to find in stores and a well-known tablet that was widely available. The Surface RT price cut aims to correct this, but it may be too little too late.

Aiming for Google Inc (NASDAQ:GOOG)’s market share brings with it its own problems since Android is freely available to a wide range of tablet manufacturers. It would be impossible for Microsoft Corporation (NASDAQ:MSFT) to underprice Android tablets as there are Android devices at almost every price point, so the company would have to provide a better user experience instead. Microsoft may be aiming at this with its expansion into Best Buy and Wal-Mart, getting the tablets in front of consumers and touting features such as a standard USB port and the availability of Microsoft Office in the tablet form factor. The problem here is that the Surface is just one of several tablets for sale in these venues, and the majority of those tablets run on Android. Microsoft could easily get lost in the crowd.

Saving the Surface

Cutting the price of the Surface RT and getting it in front of more consumers are good steps for Microsoft. Unfortunately, the company is facing an uphill battle for market share and is unlikely to capture a significant portion of the market from either of the market leaders any time soon. At best, the push to sell more Surface tablets will help to position the company for a follow-up tablet (likely focused on the Windows 8-equipped Surface Pro instead of the Surface RT) in the future. If it hopes to be successful, however, Microsoft Corporation (NASDAQ:MSFT) needs to learn from its mistakes this time or the next generation of Surface tablets will fare no better than the current one.

The article Will a Price Cut Make the Surface Relevant? originally appeared on and is written by John Casteele.

John Casteele owns shares of Apple and Microsoft. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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