Surface's $199 Price Tag Could Kill Off PC Vendors

Microsoft MSFT may win consumer support by selling its first tablet, Surface, for less than $200. However, a move like this could have severe consequences for other players in the computer and tablet industry. According to DigiTimes, notebook brand vendors, "will be out of the game unless Microsoft only sells the Surface in the US." DigiTimes said that most vendors are currently building Windows 8 and Intel-based INTC tablet PCs that will retail for more than $699 in the United States. "The sources pointed out that Microsoft is fully aware that its actions have greatly offended its notebook clients, and therefore is trying to achieve success and acquire at least 30 [percent] share in the tablet PC market," DigiTimes wrote. "A price of US$199 is expected to allow the company to achieve its needed goal." At that rate, Microsoft would easily sell more than the few million units it publicly predicted it would sell in the coming year. Apple AAPL, the current leader in tablet manufacturing, is expected to sell more than 30 million iPads in 2012 alone. However, if Surface takes 30 percent of the market, iPad sales could be greatly reduced in 2013. While this is good news for Microsoft, DigiTimes' sources speculate that if the Windows maker sells Surface at a low price point, Dell DELL and other manufacturers may halt the development of other Windows RT products. In the beginning, this could prove to be a significant challenge for Microsoft, which has relied on its PC partners for many years. Long-term, however, it could drastically change the way the company does business as it evolves into a full-fledged hardware manufacturer. This may also present a new sales opportunity for Google GOOG, which has been struggling to sell its Chromebook line of laptop computers. If Microsoft makes it less desirable for PC manufacturers to develop Windows-based devices, Hewlett-Packard HPQ and other vendors are more likely to consider Chrome OS as an alternative. Follow me @LouisBedigianBZ