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Microsoft Surface could cannibalise Ultrabook sales

A Taiwanese analyst company called Trendforce are claiming that Microsoft could hurt the market for Ultrabooks with their upcoming release of the Surface tablet. Additionally they add that it will put additional pressure on Android tablets and cause more confusion for the average punter in the street.

Research director Eric Chiou said “Surface may stand out in the market by sacrificing profits or getting subsidies from Microsoft, while the remaining brands are unlikely to possess the ability and will to do so. Undoubtedly, customers are expected to take the price of Surface as a benchmark for every single prospective Windows 8 tablets; that is, Microsoft’s Surface with an intentionally lowered price may decrease the price flexibility that affects its brand partners’ earning capacity, and even further impact their desire to launch new products.”

Chiou stated that Microsoft’s Surface could “inevitably cannibalize Ultrabook sales”, adding “Microsoft may not be pleased to see a competition between its own products.”

We mentioned previous pricing concerns, that the Surface could cost $1,000+, but Chiou made a suggestion that Microsoft could subsidise the product aiming for a much lower price point, around $599. Microsoft did this before when they released the Xbox 360, for instance. There is even a possibility that they could reduce the price of the Surface to $499.

The price point is going to be critical for success. With such a raft of tablets available on the market today, Microsoft need to tempt the consumer away from the Android and iOS products.

Kitguru says: It will be interesting to see how many Surface tablets that Microsoft sell in the run up to the end of the year. They have not earned a proven track record in the mobile space, so the jury is still out.

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