Can Microsoft Surface Pro Squeeze Out iPad?

Recently an IT-type friend of mine told me that his IT organization and company were excited about the prospects of Microsoft Surface to replace the company’s fleet of iPads. It wasn’t improvements (if there are any) in the mobile device management enabled by standardizing on the Microsoft  (NASDAQ:MSFT) tablet technology. These people were excited about something else entirely. They wanted a tablet that could work with the Microsoft Office Suite.

The “there’s an app for that” refrain has not applied to Microsoft’s Office Suite – Word, Excel, PowerPoint – for Apple’s iOS operating system which underlies iPhone and iPad.  Oh sure, you can view documents created with these apps when you open them as email attachments. And you can buy third-party applications that will enable you to edit or manipulate these. But Microsoft has not released Office for iOS.  There are hoops to jump through. Stuff doesn’t just work (as it is supposed to in the Apple world.)

Yet Office is the standard for business productivity applications.  The promise of creating a Power Point document at your office and being able to easily access and edit it from your tablet later that night is a long-desired wish of many a road warrior.

There’s a lot of promise here for Microsoft to get back out in front again by leveraging its Office stronghold and turning it into something more.

So when Microsoft announced its pricing for Surface Pro, the tablet running Microsoft Windows 8 – starting at $899 and $999 – I asked this same IT friend if he was as enthusiastic about Microsoft Surface Pro to replace the iPad fleet.  He thought the prices were high.  Now, keep in mind, that’s a first impression and no one has run any numbers. (And he’s just one guy.)  I told him that the tablet had 64 GB of storage. He said: “You mean 42 GB?”  (Little IT joke there about how much storage space Windows and Office apps require.)

I’ll be curious to see what various tech analyst tear downs of Microsoft Surface Pro reveal about the cost of the tablet’s parts. Will Microsoft be revealed to be building in a higher profit than competitors for the hardware? Is it possible that a smarter strategy would be one closer to Amazon.com’s Kindle strategy where the manufacturer subsidizes the price of the device and plans to make its profits on the sale of applications and content? Microsoft hasn’t historically been a hardware manufacturer, although it has offered peripherals and, of course, XBox.

But the question remains: is Microsoft’s pricing strategy a smart one? Or will the company end up squandering its not-so-secret weapon (Office) with a price on its tablet that is too high to be competitive?