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Microsoft's Surface Tablets Price Could Start From $400 to $500

An analyst report suggests that Microsoft could sell its upcoming Surface tablets from $400 to $500.

While Microsoft has yet to announce the pricing for Surface (despite there only being a few weeks left until its release), one analyst believes the RT version of the tablet will be priced between $400 - $500 and the Pro between $799 - $899.

Sameer Singh from Tech-Thoughts bases his estimate on previous bill of materials (BOM) calculations for devices such as Amazon's Kindle Fire, Google's Nexus 7 and Apple's iPad.

For the RT version of Surface, Singh's analysis priced each of the following components: the display ($66.95), touch screen ($43.71), processor ($21), camera ($4.10), as well as its battery ($25.74), which equals a total of $308.82 when adding a $10 manufacturing cost.

"Microsoft would be under considerable pressure to ensure that the Surface is priced in the same ballpark as tablets from OEM partners," Singh said. "Unfortunately, OEMs are also at a cost disadvantage," he said, referencing the fact that third parties are required to pay a $50-$65 licensing fee per Windows RT device.

"OEMs could cut some of the costs mentioned in the BOM above to boost margins (for example, they could use a cheaper casing), but Microsoft's hardware requirements could make steep cuts a challenge," he added. "Including the license fee, I expect the BOM of most Windows RT tablets to fall within the $300-$350 range."

Consequently, Surface's RT version is looking likely to launch at the $399 - $499 price, with around 25 to 35 percent gross margin for Microsoft, Singh said.

As for the Pro version, it'll likely retail between $799 - $899. Along with the RT costs, the analyst estimated another $321.35 in BOM components for the Surface Pro, with the considerable portion of that price ($204) attributed to the Intel Core i5 processor.

Microsoft CEO Steve Ballmer had previously said Surface may release with a price tag between $300 and $800. Surface itself will launch alongside Windows 8 on October 26.

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