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Microsoft's Surface 2 May Be Hurt By Late Arrival, High Prices And Weak Ecosystem

Microsoft's Surface 2 May Be Hurt By Late Arrival, High Prices And Weak Ecosystem

Is Microsoft (NASDAQ: MSFT) being hurt by its late arrival to the tablet market?

In the months and years after Apple (NASDAQ: AAPL) released the iPad in April 2010, dozens of companies entered the fray.

Hewlett-Packard (NYSE: HPQ), Dell (NASDAQ: DELL), Barnes & Noble (NYSE: BKS) and Toshiba (OTC: TOSBF) were among the companies that launched a tablet after Apple.

Samsung (OTC: SSNLF) wasn't new to the market, but it developed the Galaxy Tab series to combat Apple's sudden growth.

Even Amazon (NASDAQ: AMZN) -- a company that was mostly known for low retail prices (and popular e-readers) -- released a seven-inch, $200 tablet.

Despite the large number of industry entrants, Microsoft waited until October 2012 to release its first tablet.

According to DigiTimes, that could be one of the reasons why Surface struggled to succeed last fall and led to a $900 million write-down.

Related: Microsoft Surface May Achieve 1% Market Share In 2014

That's not the only reason, however. The high product price (the original Surface RT retailed for $499 without a touch cover) is also being blamed for the tablet's trouble at retail. The weak ecosystem and familiar OS -- Surface uses Windows 8 or Windows RT instead of its own mobile operating system -- are on the list of culprits as well.

With so many lower-priced tablets available, DigiTimes researchers believe that the Surface 2's $449 price tag is "unfriendly" to consumers.

Microsoft will continue to sell the original Surface RT for $349 -- just $20 more than Apple's iPad Mini. With a 10.6-inch display, Surface RT is one of the cheapest full-sized tablets available.

Two days after Microsoft unveiled its latest tablets last week, Amazon made a quiet announcement regarding the seven-inch Kindle Fire HDX (starting at $229) and Kindle Fire HDX 8.9" (starting at $379).

Apple is expected to unveil the fifth-generation iPad and second-generation iPad Mini in October.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ


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