If Microsoft really wants to shake up tablet market, it needs a radical price for Surface

So, Microsoft has made what appears to be a credible tablet, the “Surface,” announced with Apple-like fanfare on Monday.

It’s a welcome step, deciding to make its own integrated device. But it’s also late, and will be even later by the time it finally arrives some time this Fall.

The question remains: How to get people to give it a look? The answer: Offer a radically low price: $150.

Here’s why.

I was thinking about this during the announcement on Monday. I recalled a similar announcement  a couple of years ago: The ill-fated Hewlett Packard TouchPad. It didn’t sell much, and so HP discontinued it. But then HP decided to have a fire sale, pricing them at $99. And suddenly, TouchPads flew off the shelves.

Amazon sort of gave a nod to this idea, by pricing the Kindle Fire at $199. It reportedly was willing to lose money on the device but make that up through sales of books and other digital media.

It’s hard to remember now, but when Apple first announced the iPad more than two years ago, the $499 price for the lowest-end version came in about half of what many pundits expected. That probably was one of many factors that helped turn it into a monster hit.

Now comes Microsoft. It’s got deep pockets, and can probably sustain losses on the Surface for several years, just as it did for many years on the Xbox before it turned profitable, and continues to do on its online division.

The key, at this point, is to get the Surface into the hands of as many people as possible. That will ultimately be the thing that will get the attention of the developers that Microsoft needs to create apps. And just possibly, it will tap an entire specturm of people who might be interested in a tablet of some kind but not be willing to spend hundreds of dollars.

It’s probably tempting to try to approach Surface as a way to make Apple-like margins by putting hardware and software together. But no matter how well designed the Surface is, I think it’ll be hard to compete head on with the iPad by trying to get caught up in a features arms race.

Techies can spend days comparing features and specs between different devices. But most consumers don’t care all that much. Their eyes are first going to go to price. And having the least expensive option on the market will help Microsoft stand out.

Microsoft has taken a small, but radical step by building its own tablet, a move that risks its relationship with its traditional PC partners. Now, we’ll see if it has the stomach to go one step further, offer Surface at a radically low price, and see if it can loosen Apple’s death grip on the tablet market.