Software developer Microsoft Corporation (MSFT) slashed prices of its Surface 2 tablet lineup by $100, representing a 22% cut irrespective of the model. The entry-level second-generation Windows 8.1 RT device will now cost as little as $349 and the new prices will be effective from Aug 24 to Sep 27 in the U.S.
With the new price cut, the Surface 2 32GB wifi, 64GB wifi and 64GB LTE editions will cost $349, $449 and $579, respectively. With the new price, the 32 GB Surface 2 will be cheaper than Apple's (AAPL) 16GB iPad mini, which costs $399. However, it will not include a keyboard attachment that is generally a compulsory peripheral for any Surface tablet.
The Microsoft Surface 2 runs on NVIDIA (NVDA) Tegra 4 and features a 10.6 inch display with 1920 x 1080 pixel resolution. The device has been unable to generate user interest and has seen tepid sales since its debut in October last year.
It is unclear whether Microsoft wants to clear the inventory before it discontinues the tablet to focus on its successor Surface Pro 3 or whether it is trying to scrap a product which is incapable of delivering on its goals.
Surface is a series of tablets produced by Microsoft in a bid to amalgamate its Windows OS with its own hardware. It has launched five Surface devices to date: the ARM-based Surface RT that was upgraded to Surface 2, and the Intel (INTC)-based Surface Pro that was refreshed twice to Surface Pro 2 and Surface Pro 3. Microsoft unveiled Surface Pro 3, the thinnest, lightest and largest laptop-tablet hybrid product in the series in May.
However, these devices have generated lower revenues than the amount spent on marketing them. Even though the company is yet to register profits from the Surface devices, it is leaving no stone unturned to capture the imagination of customers. Microsoft is also offering its services and technology across a larger number of devices, which could help it protect its still-leading share of key applications markets.
Currently, Microsoft carries a Zacks Rank #3 (Hold).
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