Microsoft to Sell Low-Cost Surface to Rival Apple's iPad

By Jay Greene 

Microsoft Corp. is cutting prices on its Surface devices, introducing a $399 tablet to compete with Apple Inc.'s least-expensive iPads.

The new 10-inch Surface Go, which ships Aug. 2 in the U.S. and two dozen other markets, is the least costly among the five Surface devices that Microsoft makes. The Surface Go is aimed at the same potential buyers as Apple's 9.7-inch iPad, which starts at $329.

Microsoft's Surface devices have been showcases--computers made with premium materials that have sleek designs intended to highlight the capabilities of the Windows operating system and spark creativity among its hardware partners. Only a few of those partners, like Asustek Computer Inc., offer designs similar to what Microsoft is introducing.

The Surface portfolio has produced uneven results for Microsoft, though in the past few quarters the devices have sold well. In the three months ended March 31, Surface generated $1.09 billion in sales, up 32% from a year earlier.

Tablet shipments world-wide fell 11.7% in the first quarter from a year earlier, according to International Data Corp., a market-research firm. One bright spot was shipments of tablets with detachable keyboards, such as the Surface, which grew 2.9%.

Surface Go devices purchased in stores will run Windows 10 in "S mode," a variant of the operating system that the company introduced last year.

Windows S only permits users to run apps obtained through Microsoft's online Windows Store. The idea is to make the devices more secure by limiting applications to those Microsoft has verified. But some popular apps, like Google's Chrome browser, aren't available.

Microsoft will let customers switch, at no cost, to the regular version of Windows 10.

The company is also offering a Surface Go that runs Windows 10 Pro, a version of the operating system that business customers use for its management features, for $449. Customers can pay more to bump up storage and memory on both versions. And Microsoft will sell two versions of a cover that includes a keyboard for an additional $99 to $129.

Write to Jay Greene at [e-mail]

(END) Dow Jones Newswires

July 09, 2018 22:08 ET (02:08 GMT)

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