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Summary:

In an interview with The Seattle Times, Microsoft CEO Steve Ballmer indicates a “sweet spot” for the price of the company’s upcoming Surface tablet, which is expected next month. He also discusses the company’s path over the next five to ten years.

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Since Microsoft debuted its new Surface tablet in June, the tech world has been buzzing about the possible price of the new device, with much debate centering on rumored $199 price tag.

But in an interview with The Seattle Times, CEO Steve Ballmer hinted that, with its new tablet, Microsoft is aiming to compete on features more than price. Ballmer said the “sweet spot” would be between “$300 to about $700 or $800.”

“I think most people would tell you that the iPad is not a superexpensive device. … (When) people offer cheaper, they do less. They look less good, they’re chintzier, they’re cheaper.

If you say to somebody, would you use one of the 7-inch tablets, would somebody ever use a Kindle (Kindle Fire, $199) to do their homework? The answer is no; you never would. It’s just not a good enough product. It doesn’t mean you might not read a book on it….”

The Verge points out that the company could still offer a lower price with a subscription to Microsoft’s Xbox Music service, but Ballmer’s comments seem to indicate that the vendor is planning to present Surface as a higher-end, highly functional device.

In the interview, Ballmer also said that while Microsoft was born as a software company, over the next five to ten years, the company will retain its core capability in software but evolve into more of a “devices-and-services company.”

“[That] is a little different,” he said. “Software powers devices and software powers these cloud services, but it’s a different form of delivery…. Doesn’t mean we have to make every device. I don’t want you to leap to that conclusion. We’ll have partners who make devices with our software in it and our services built in.”

Ballmer also defended the company’s so-called “stack-ranking” management system, which was called out as destructive and demoralizing in a damning Vanity Fair article in August on “Microsoft’s Lost Decade.” (In the system, supervisors are forced to place employees into tiers based on performance.)

While Vanity Fair said former Microsoft employees maintain that the system led to a counter-productive corporate culture, Ballmer said it rewards top talent and nudges lower performers to get with the program.

“I think you always want to have a system that has a chance to recognize people who are doing a great job, a good job, and helping people who are still doing maybe even a decent job, but they’re not doing as good a job as the other folks,” he said. “It helps to let those people recognize where they stand.”

  1. The ranking system never adversely affected me while I was at Microsoft, but I could see in other groups how it was toxic. It forces you to pick winners on a team of losers, and losers on a team of winners. It ignores team performance entirely. Additionally, you end up having some orgs with a whole lot of promoted people not adding value. I love the company dearly, but I wish they’d ditch that system and let managers decide how each person fits for who they are.

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  2. The price will be somewhere between $300 and $800.

    Well that really narrows things down to a final price. ;-)

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    1. Not one price. Different price points for memory or configuration options.

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    2. 32 GB Surface RT = $300
      64 GB Surface RT = $400
      64 GB Surface Pro = $600
      128GB Surface Pro = $800

      How’s that look to you?

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      1. also needs a 16GB version at $250 to kick start sales and app development

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  3. Christopher William Crawley Sunday, September 16, 2012

    So thats what the Apollios.com and I will look like in 10 years TY Steve!

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  4. Microsoft just does not get it! Their ‘Surface’ is a hybrid between a tablet and an Ultra book. If I want the keyboard functionality I should and would pull out a real computing device that can do more than just typing. What is the difference in Microsoft’s Approach and phones that have a touch screen as well as a keyboard? As it stands tablets are great & convenient but are not and were not meant to function like a traditional computer. They are light on both the hardware and software side, with advent of Apps why should you need a keyboard, what happened to the concept of simplicity?

    The two chief reasons Microsoft’s attempt at the tablet market looks they way it does are;

    A- Even they admit on their official Surface site that ‘Some functions require a Keyboard’. Well what could you expect from the creators of ‘DOS’ operating system, Microsoft is still in the dark ages. There are no innovative coming out of Microsoft but a kick-stand!

    B- The keyboard is meant to appeal to people who have not made the transition to a touch pad or find it difficult to use, this pool is getting smaller and smaller by the day.

    Its going to be back to drawing board for Microsoft. The good news is that there is plenty of ingenuity out there that is making Microsoft irreverent by the day.

    This comment was written by Allen Moshiri a life long Computing & Technology veteran, who has worked on every platform Microsoft has ever produced.

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