Microsoft drops Surface RT price by as much as 30%

Microsoft slashed prices on its Surface RT tablets by as much as 30 percent, with the entry-level 32GB model selling for $349 starting July 14.

The 64GB Surface RT was also discounted by $150, and now sells for $449, or 25 percent off its former price.

When Microsoft launched the tablet, it sold the 32GB device for $499 and the 64GB configuration for $599.

Microsoft started selling the Surface RT at the lower prices July 14, as did some of its U.S. retail partners, including Best Buy and Staples. On its website, Staples noted that the discounted prices are valid until July 20, and only while supplies last.

Microsoft's website, however, listed no caveats, hinting that the lower prices might be permanent or at least will be honored for longer than one week.

Next generation expected

The prices are another attempt by Microsoft to clear its existing inventory in preparation for a second-generation line of Windows RT devices. Previously, Microsoft had launched multiple deals to rid itself of the poor-selling tablet, most recently in June when it slashed prices by 60% in a bid to get universities and K-12 schools to buy the device.

Earlier, it kicked off a buy-a-Surface-RT-get-a-free-cover deal that ran until June 30. And at several conferences, including June's TechEd North America and this month's Microsoft Partner Conference, the company sold attendees a 64GB Surface RT for $100, 83 percent off list price.

The sale prices are nearly at Microsoft's cost, which according to estimates of the tablet's component prices, runs the company at least $284 for the 32GB Surface RT.

Microsoft has not abandoned Windows RT, the pared-down operating system that powers the Surface RT, but virtually every third-party OEM has either pointedly ignored the OS or publicly announced that they would not support it with devices of their own. Instead, the OEMs have flocked to Windows 8 Pro, even though some analysts question the value of touch devices on a platform whose biggest selling point is legacy software that doesn't support touch.

It was the lack of OEM support that made it possible for Microsoft to drop the price of the Surface RT so dramatically. Microsoft essentially had promised hardware partners that it would not undercut their pricing—unlike Microsoft, the third-party OEMs must pay for the Windows RT license—but with no competition, and thus no OEMs to antagonize, Microsoft was able to push the Surface RT into the bargain basement.

Tablet strategy shifting?

Long-time supporters of Microsoft have turned their back on Surface RT, even at the heavily-discounted price. Today, blogger Paul Thurrott, generally bullish on Microsoft, excoriated the tablet, calling it a "piece of junk" that is "simply too underpowered to provide a satisfactory experience."

Microsoft has made no noise about when, or truth be told, even if, it will debut new Surface RT devices. But it seems clear, after last week's corporate reorganization and its emphasis on a "complete spectrum" of devices—a "family of devices," as CEO Steve Ballmer put it—that the company must at some point unveil new tablets, if only to put its money where Ballmer's mouth is.

Analysts and pundits alike have held up the newest processors from Intel and ARM licensees such as Nvidia as Microsoft's best hope for gaining more ground in tablets. Those processors, battery misers and more powerful, respectively, are expected to appear in new devices this fall—in time for the holiday selling season but likely not for the almost-as-important back-to-school sales, into which Best Buy lumped the discounted Surface RT.

Microsoft has not revealed sales figures for the Surface line—which also includes the Surface Pro, powered by Windows 8 Pro—but estimates by research firms like IDC have been lackluster.

The discounted Surface RT can be purchased at Microsoft's retail and online stores, as well as retailers like Best Buy and Staples.

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