When they announced that the first in-house Windows tablet was on the way, Microsoft got a lot of people excited.  We were presented with a lot of interesting information, impressive potential, and the beginning of a serious Windows 8 vs iOS showdown.  What we did not get was information on pricing.

So far there has been little information on this topic despite the time that has passed since the Surface tablet line announcement.  The Windows RT version will apparently be priced competitively with other popular ARM tablets while the full Windows 8 version will run about as much as an Ultrabook, but nothing more specific us known.  That could be taken in a few different ways and there are signs that it might be very good for consumers.

Since the ARM side of the Surface line will be launching first, and since it is the less expensive option, there has been some speculation that it would amount to a budget tablet alternative to the more expensive and fully functional Windows 8 model.  Nobody really thought it would succeed on its own.  If rumors are to be believed, however, on October 26^th the Microsoft Surface will be available for just $199!

This is completely unconfirmed, of course.  It could be completely baseless.  Consider the thought process behind it, though.  The Windows RT Surface will be competing more directly against Android tablets and iPads then its Windows 8 counterpart.  The Windows 8 model is really more of a laptop alternative, though obviously the RT model retains some of that capability.  In order to compete with the most successful Android tablets, it will be important to not attempt to sell at a completely different price range.

The Kindle Fire and Nexus 7, Android’s two best selling tablets at the moment, are both 7” devices that sell for $199.  To match that price, especially given that the Surface is a larger device, Microsoft would have to be willing to sell at a loss.  How much of a loss is hard to guess at, but at the very least it would be expected that they negate the licensing cost for Windows RT and subsidize some amount of the hardware.

Amazon is doing the same thing with some success thanks to the Kindle Fire’s integrated storefront.  Since Windows RT will be locked to the Microsoft Store and desktop functionality will be minimal this is a realistic way for the company to offset some of their expenses.  It all depends on how much of a gamble Microsoft is willing to make on Surface users’ spending habits.

This move, if it actually happens, would certainly go even further toward alienating already stressed OEM partners.  Acer in particular stands out as upset over Microsoft’s move into hardware, but any company hoping to gain traction in Windows RT tablets will be at a disadvantage to the Surface.  After all, Microsoft is the only organization likely to be getting a cut of all customer purchases any time soon.

Realistically, this is a long shot.  There are small indications that it could happen and a lot of speculation and hoping going on among the fans, but $199 is an extremely low price for something like the 32GB Surface.  We shall have to wait and see.