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Microsoft Pri0

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August 15, 2012 at 8:10 AM

Sherlund: “We do not believe that Microsoft will price Surface at $199”

The rumor that Microsoft would price a version of its Surface tablets at $199 made the tech rounds yesterday.

Rick Sherlund, veteran Microsoft analyst at Nomura, chimes in with his thoughts today, saying: “We do not believe that Microsoft will price Surface at $199, but rather that it would be priced in a similar range with the iPad (around $500).”

The $199 price, Sherlund points out in his analyst note, is “well below the BOM [bill of materials] of probably $300 and would, we think, undermine its OEM [original equipment manufacturer] partners and thus we firmly believe this will not be the case.”

Microsoft has not disclosed prices for the two versions of the Surface tablet that it has announced. But it has said previously that the Surface for Windows RT will be priced comparably to other ARM tablets (e.g. the iPad), and that the Windows 8 Pro version would be priced similarly to premium ultrabooks.

Sherlund does say, however, that he thinks Microsoft may enter the lower-end tablet market with Barnes and Noble, with the two creating a new, 7-inch tablet. The two companies announced a partnership in April to create a subsidiary focusing on digital books.

“We would not be surprised to see Microsoft ship a 7-inch device along with Barnes and Noble, sometime in the future, which might be more appropriately priced at $199,” Sherlund said in his note.

(A previous rumor, by the way — since debunked — had the Surface priced at $1,000.)

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