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Microsoft may not be the trendiest name on the block any more but whether you are rushing to get your hands on the new Surface tablet or not, the brainchild of Bill Gates still certainly has a lot to teach entrepreneurs and tech businesses about strategy.
Rumors and speculation over the pricing of the new Microsoft Surface tablet are kicking up a storm on the web this week. One inside source has reportedly leaked a final price tag of just $199. For a 10" tablet many find that almost unbelievable, especially with the iPad going for double that.
Microsoft can make a profit on the Surface RT at $199 and in fact may find this the market share saving move, which keeps them in the game.
Like today's smartphones the tablet could go for as little as $199 with a subscription service to Office and still make a profit over time. It pulled it off with the Xbox and with billions in the bank it needs to put that money to work. So why not use it to smash the completion?
It will immediately shrink the playing field and mean less competition to worry about, as most others simply won't be able to afford to release new devices in this range. With this move Microsoft would essentially be acquiring a huge amount of market share and locking them in for the long term via subscriptions and can make a killing on apps, software, and future products not to mention advertising.
This would potentially wreak havoc at Apple who was expected to release the new mini iPad soon. Who is going to fork over the same amount of money for a smaller tablet?
The timing is also perfect and coincides with the peak shopping season for devices and the best time for businesses to roll out new mobile apps.
Of course this may all ultimately be a little late to win back customers from Google, but the lessons should not be wasted by entrepreneurs: stash cash, do what it takes to hold market share captive, consider membership models, and get your timing right.