Meh, Microsoft is starting a new OS, you'd expect that the hype from this company especially would be out of this world, but it had to cut the price of windows and thus it's revenue and profit won't be as great as a lot think come earnings season in jan.  Also, the analysts aren't expecting this to make msft a phenomenal company again, as the growth estimates of just about all of the financial analysts for the next five years are all mediocre.  I can give you multiple sources for estimates if you like..

Guess Apple isnt the only one to charge an arm and a leg

Some people here really don't understand what this device does and who it's for.

This device isn't meant for finger painting and slinging birds around. It's a durable, light, portable, intel i5 tablet that has an active digitizer. It's a content creation device.

They can give 2 hours of battery and charge 2000 dollars for it and people will still buy this. What this does, the iPad or any Android tablet can't do.

If you want a tablet allowing you to pinch to zoom in a browser for 10 hours a day and play tablet games, go buy an iPad, Android or Windows RT device.

It's mediocre in the sense that msft had to do much more marketing than usual for a fresh OS and had to assume a lower price upfront for windows.

How does marketing more makes it mediocre.? Win 8 is more of a revolution over Win 7 because it brings touch screen support to all forms and the change needs to be marketed so that people realise its possibilities. Win 7 was only a stable relase over Win Vista.

Its getting the same kind of hype and marketing that smartphones recieved . ( you think smartphones were mediocre ?).

As for price . Mountain Lion sells for $20 ( full pro version). Chrome OS is basically free and in contrast the Windows 8 sells for $40 ( update ) at least and price goes to maybe $115 for other versions.

So yes Windows 8 is comes cheaper than previous Win versions but it still is the most profitable among the market and the price point is actually better from consumer point of view which also makes it the best OS out there in the market.

Another very important point to note about Win 8 pricing is .. that it is aggressively priced because it will become first choice for user to upgrade from Win XP ( still captures around 50% of the OS market). This will help microsoft bring developers straight to Win 8 and its ecosystem will boom faster than any other out there on the market.

You can look at price cuts as marketing also.

But, both indicate a weak faith or expectations bc a company is trying to increase demand along the price curve.  Ever took an economics class?  I shouldnt have to explain the the simplest things for y'all.

price cuts are now marketing? what economics class should i take to learn that?

I had a class on pricing for my bachelors of business and it was a marketing class.

In my opinion, if Microsoft was producing the Surface as competition for the netbook and low-end tablet market they could (probably) carve out a niche for themselves. It doesn't compare well against high end tablets or ultrabooks, and pricing it in/above those markets only ensures that it will be remarkably unpopular.

To put numbers on this, at $200 Microsoft would have a successful product with the Surface, at $400 they could carve out a small niche, at $600 they will have a moderate profile "flop" like the Zune, at $800 they're heading for a high profile flop, and at $1000 I see it being discontinued within 6 months. They have (realistically) over-shot their market by $600 to $800 per unit.

I think you are looking at the wrong market and very short term strategy here. Also I think you are struggling to see Surface and Windows 8 in general as a premium product if you think it should cost 200 dollars. 

If a product like Surface is offered at netbook like pricing, Microsoft would be screwing themselves hardcore. In the grand scheme of things, they really don't care how much a Surface sells. The point of the product was to raise awareness about Windows 8 and RT, and offer a cool hardware design that makes cool comercials.

The real goal for microsoft is to get OEM's to keep buying 80 dollar Windows 8/RT licenses. Selling the Surface for cheap will do nothing but cause them to lose money on hardware, while undercutting the OEM's with their own hardware hence causing them to lose Windows 8 software revenue. 

Finally the Surface Pro compares very favorably to anything out there with same features. There is a professional market out there that absolutely needs an i5 or higher and a Wacom digitizer. Look up how much devices that have both cost, and what kind of weight and battery life they offer. 

I agree that the surface RT is kind of a tough sell at 499 when an iPad is the same price (until it gets a better app library and more features) but an x86 tablet at $499-$599 with similar battery life and portability is a no brainer for me. There is quite a few of those available already...