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Slash A THIRD off Surface RT price or it's toast, Microsoft told

And actually sell it through the shops - who are you? Apple?

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Microsoft needs to hack a third off Surface RT prices and widen distribution to give the fondleslab a fighting chance to compete, said equities analyst Detwiler Fenton Group (DFG).

The ARM-powered device isn't winning many friends apart from the software giant's rank and file. Only last week the firm was reported to have halved production orders with Surface makers in the Far East.

Now Boston market research biz DFG has issued a note claiming "sales on Microsoft's Surface RT tablet continue to disappoint". It expected the Windows 8 titan to ship roughly one to two million RT laptop-cum-tablets in calendar Q4 2012, but adjusted expectations dramatically to between 500,000 and 600,000 units.

"This combined with Microsoft's inability to launch Surface Pro tablets in volume in Q4 suggests that Microsoft's tablet strategy is in disarray," stated DFG.

Microsoft has yet to confirm when Surface Pro will ship but hinted it would be about three months after RT, aiming the launch for January.

DFG stopped short of describing Microsoft's handling of the gear as a failure because "improved hardware and distribution as well as an ageing laptop fleet in Western Europe should boost prospects in 2013".

Back in the summer when Microsoft revealed the device's blueprints, CEO Steve Ballmer disappointed distribution channel partners by selling the tech direct from Microsoft's own US stores and microsoft.com.

DFG said mixed reviews and the $599 starting price were putting off customers, but the major issue has been its go-to-market strategy.

"Lack of distribution is killing the product," the equity analyst stated, "[lack] of retail exposure at Best Buy and others is severely depressing sales."

DFG director for technology research Mark Gerber told The Channel that Microsoft needs to hack $200 off the retail price.

"The Surface RT price need to come down: $399 with the keyboard would be a good starting price," he said.

He also expects Microsoft to change direction and bring on board the distribution channel, "if for no other reasons than to clear inventory".

Channel partners have been "clamouring" to get hold of a Surface device, James Akrigg, Microsoft's head of technology for partners, told us.

"The current plan is to sell it through the stores that are in the States and the online store. I'm sure we've had a lot of feedback about alternative ways of getting that to market but I've not seen any announcement regarding how that might change." ®

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