Can Microsoft Make the Surface More Competitive?

Microsoft (NASDAQ:MSFT) has a lot of work ahead of it to get its Surface RT and Surface Pro tablets in a position to truly do battle with heavyweights like Apple’s (NASDAQ:AAPL) iPad or Amazon’s (NASDAQ:AMZN) Kindle Fire. Though the road has been rocky, Microsoft may now have a maneuver in mind that could help it engage more of the market.

On January 8, an error came out of a set of updates that Microsoft released, and it has been giving Windows RT users trouble updating their devices. This kind of error is to be expected now and then as technology advances at such a rapid pace, but it can be life-threatening for a product that is still a fledgling in terms of popularity.

Markets are at 5-year highs! Discover the best stocks to own. Click here for our fresh Feature Stock Pick now!

Considering the price of Microsoft’s Surface tablets, a customer might expect to run into a little less trouble so early on. Fortunately, Microsoft plans to have a fix ready for the error early next month. The company is also looking to expand the Surface line to reach more customers and compete on more levels…

Right now, a Surface tablet starts at $500, and the Surface Pro is planned to start at $899. For comparison, a quick look on Apple’s website showed the iPad 2 starting at $399, and even Amazon’s 8.9-inch Kindle Fire HD with 4G LTE is only priced at $499 on Amazon’s website.

For the moment, Microsoft does have a slight competitive edge in that its Surface tablets are actually hybrids with detachable keyboards, but those bump the price up even further. So, even though Microsoft recorded $6.5 billion in profit and over $21.5 billion in revenue for its second quarter of fiscal 2013, which started in October, the company has to plan carefully how to maintain that success, and stronger tablet sales seem the best choice as PC sales continue to slip.

One plan that could prove fruitful for Microsoft is to expand the Surface series — bring greater diversity. CFO Peter Klein said that company wants to offer a “greater variety of devices at a bigger variety of price points.” If Microsoft can offer Surface tablets at prices that compete better, it may be able to lean on the distinguishing keyboard feature to entice consumers away from Kindles and iPads.

Investing Insights: Microsoft’s Stock Is Boring Yet Tempting.