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About Those Mythical Thousand Dollar Windows Surface Tablets

A story has been going around the past few days about possible price leaks for the not yet released Windows Surface tablet. According to one Swedish retailer, the cheapest model will sell for nearly 7,000 Swedish krona, or about $1,000 USD, and the higher end models will cost up to 2 grand. I don’t believe it, but even if it’s true there’s an important detail that many stories are leaving out.

I saw that listing page over the weekend and decided to ignore it. I didn’t find the source credible (nor the prices) because putting up fake prices for a device which doesn’t exist yet is the kind of trick that I have seen shady sites use to generate attention. In this case, I’m not even sure that Microsoft knows the prices yet, so I seriously doubt that some nobody site in Sweden would be the first to leak them.

Update: I was right; these numbers were a myth started by Webhallen. See this comment for a link and a quote.

But I’m posting about this story today because as I read the coverage of this rumor I’ve noticed that there’s one detail that has slipped by some of the blogs. There are many blogs posting about this, including some Apple blogs who are gleefully pointing out that the Surface tablet is doomed.

I was inspired to write this post by CultofMac, one of the better Apple blogs. These folks are usually on the ball on technical issues, but in this case they missed an important detail about the money.

It’s about the sales tax.

To be more exact, Sweden (and much of Europe) doesn’t have a sales tax; they have a consumption tax called VAT, and it’s usually added on to the retail price before the price is posted, not after (the way sales tax is handled in the US). If you want to translate it to a US retail price then you’ll need to lop off about a fifth to a third of the price (and maybe even more).

Do you see that 7 thousand krona price? You can remove the VAT and the price will drop to around 5600 krona. That converts to a US retail price of around $800. And if you deduct the higher price of doing business in Europe, the US retail could get even lower.

Do you know what? These could really be the correct retail prices, and that would mean we would see the base model of the Windows Surface tablet selling for around $600 to $700 in the US.

That’s not too bad, is it? Sure, it costs more than the iPad but the difference is small enough that the extra cost could be worth it in order to get a full OS on a 10″ tablet.

But I’m still taking this rumor with a grain of salt. I just don’t see how the site would have gotten the pricing info this early – unless Microsoft leaked it in order to make the $700 retail look better. And you know that is both possible and a good idea.

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fjtorres July 26, 2012 um 9:49 am

Nice math.
Also, people *always* forget that transatlantic electronic product price comparisons are *never* just currency-equivalents.
Right now, the PS3 runs $250 in the US and 250 euros before the VAT.
That’s about a 23% differenttial right there.
So the price could easily be $700 dollars equated to 700 euros converted to Kronen with VAT added.
Just a good guess, all made up.

The swede July 26, 2012 um 11:02 am

This site is not shady at all. It’s actually one of swedens biggest gaming and computer retailers. At the end of the product description they state: "Price, image, product description and release date are preliminary and may be changed." They often use higher prices for pre booking

Nate Hoffelder July 26, 2012 um 2:30 pm

Actually, it looks like I was right. They were just as shady as I expected:

Our customers are very interested in pre-ordering these products, so we have set a high preliminary pricing for the lineup so that they may be able to pre-order them.

Just to clarify, we have not received any pricing from Microsoft regarding MRSP or purchasing net cost, and any people who have booked the Surface at this high price will of course have their order adjusted before any product is shipped. So we’re not going to overcharge anyone for being an early adopter.

So what they did here was fake up some prices in order to get attention. Shady.

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