Microsoft slashes Surface RT prices by $150

Base model to cost only $349 as company gets real about tablet's market position

Microsoft has slashed the cost of its Surface RT hybrid tablet range by $150, with the basic 32GB model now costing only $349.99 in the US market, with the 64GB edition priced at $449.99.

A 32GB Surface used to cost $499.99.

Prices on Microsoft's UK sales website still stand as before, but are expected to change today.

The decision follows a particularly inauspicious retail performance for the ARM-based Surface RT, which, after its October 2012 release, has failed to make much of a dent in consumer or enterprise markets, or those shades in between.

By March 2013, it was reported only one million Surface RT units had been sold, in comparison to the Windows 8-based Surface Pro, which launched in February and had already sold 400,000 units by March.

While it appeared the Surface RT was aimed squarely at the iPad market, with its focus on downloadable apps rather than productivity via legacy Windows support, potential buyers found the machine's price hard to swallow.

Microsoft began offering the Surface RT to educational institutions for $199 a unit last month, and has also begun aggressively pushing the Surface Pro through enterprise sales channels, deciding to no longer rely purely on its own online and retail stores.

Surface RT's price reduction may also pave the way for further hardware announcements from Microsoft, particularly in the 8-inch space, which CEO Steve Ballmer showed particular enthusiasm for during his keynote at the company's Build conference in San Francisco recently.

However, Build passed without even the slightest hint of a new Microsoft mobile hardware announcement, Ballmer and his execs choosing instead to focus on present and future offerings from Microsoft hardware partners such as Lenovo and HP.

Microsoft's restructuring plans, formally announced yesterday, are sure to lead to some interesting changes of policy and new business approaches down the line.