Friday, February 08, 2013

People have spoken with their wallets


I wrote about the Surface's pricing strategy a few months ago that led to an interesting discussion on Hacker News. My hypothesis was the Surface would fail, regardless of its technical virtues, if it was not priced appropriately. The post was aptly titled, The dilemma of pricing...

The first quarter numbers of the Surface RT are out, and Microsoft sold less than 750,000 units over what is considered the busiest quarter of the retail year. It's a shame because the device has received positive reviews. Some say that their channel strategy was broken, that the ecosystem sucks, etc. I still maintain that it's the price-point.

The Distribution Channel myth

There are ZERO, NONE, NADA physical stores from which people can buy the Kindle. Microsoft has both a physical and an online presence. It should surely sell more Surface RTs than Amazon did Kindle Fire HDs.

Wrong!

Canalys inferred that Amazon sold 4.6 million Kindle Fire HDs in the last quarter. So it's not channel or distribution related.

Myth, busted!

The It's the ecosystem, stupid myth

Surface RT has more features than the Kindle Fire HD
Surface RT has an equally rich ecosystem as the Kindle Fire HD

Myth, busted!

So what is it? It's the price, stupid!

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