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Microsoft is cutting the price of its Surface RT tablets, base model to cost $349

Microsoft is planning to cut the price of its Surface RT tablets.  Sources familiar with Microsoft's Surface plans have revealed to The Verge that the price cut could occur as early as next week, with each model being cut by $150.

The Verge Tom Warren

Context & Ripple Effects

The Verge's report that Microsoft plans a $150-per-model cut across the Surface RT line, taking the base model to $349, arrives weeks after a June 2013 Bloomberg report that Microsoft was preparing to cut prices for its Windows tablets broadly. It also follows a running price problem for the platform: back in August 2012, Lenovo had already positioned RT tablets as up to $300 cheaper than comparable Windows 8 machines, an early signal that RT needed aggressive pricing to find buyers.

First-order effects

  • Buyers get a materially cheaper entry point into the Surface line if the cut lands next week as sources describe, with every RT model dropping $150.
  • Microsoft's own hardware now undercuts the OEM Windows tablet pricing it has been trying to protect, putting direct pressure on partners selling Win 8 and RT slates at higher price points.

Second-order effects

  • Rival Windows tablet makers are forced toward matching discounts or differentiated positioning, since a first-party Surface at $349 resets the reference price for the whole category.
  • The cut lands the same month as Ballmer's confirmed company-wide reorg with memos emphasizing consumerization, suggesting hardware pricing and the organizational push toward consumers are being coordinated rather than coincidental.

Third-order effects

  • A pattern of deep, repeated first-party price cuts would signal that Windows RT cannot sustain premium hardware margins, pushing Microsoft toward a volume-and-services model where devices are priced closer to Android competitors than to the iPad.
  • If first-party pricing keeps resetting the floor, OEMs may retreat further from the Windows tablet market, leaving Surface as Microsoft's primary vehicle for tablet strategy.

The trend: Windows RT is being repriced from premium tablet to value alternative, with Microsoft's own hardware leading the discounting that OEMs cannot match.