Microsoft prices Surface tablets. Pre-orders open now.

The big news yesterday was Microsoft revealing pricing and configurations for their Surface tablet. (As well as opening pre-orders, in case you're interested.)

The cheapest Surface tablet is the 32 GB model with no cover, and that'll run you $499. If you want to include a Touch Cover the price jumps to $599, and a 64 GB model with Touch Cover is $699 (there doesn't seem to be a way to order the 64 GB model without a cover). The Type Cover (the one with the physical keyboard) is $129.99 and the Touch Cover is $119.99, though it isn't clear why you'd buy one of those separately.

The most immediate comparison that springs to mind is, of course, the iPad. Apple's 3rd generation iPad, with 32 GB of storage, goes for $599, so the Surface is $100 cheaper. But, the iPad has that 2048 x 1536 display and a well established app ecosystem. The Surface has a 1366 x 768 display that's larger (10.6" vs 9.7") than the iPad and an app ecosystem that is just getting started. There are other factors to consider, of course, like the fact that Surface has both a USB port and a MicroSDXC card reader built in, but that extra $100 might be money well spent.

In both cases you're buying into a closed system; the Surface that is available for pre-order now runs Windows RT, and Windows RT is a pure tablet OS; everything you install on it comes out of Microsoft's Windows 8 store (later this year we'll see Surface Pro tablets that run the full version of Windows 8 and which will allow you to install the Windows software you already own). And we all know about the iPad's "walled garden."

Then of course there's Android with it's more open system and somewhat cheaper hardware, though these days all the action in the Android camp seems to be around 7" tablets.

Anyway, I think Microsoft has priced the Surface too high. I don't think it can go head-to-head with Apple in the tablet space. It needs to provide better value at least in these early days in order to establish an install base and make the ecosystem attractive to developers.

On the other hand, Surface pricing might be intentionally high in order to let Microsoft's partners come in with less expensive Windows RT tablets. After all there are a lot of companies working on tablet designs out there, though the earliest reveals don't seem to be much cheaper than Surface.

It's early days yet but I just don't understand why the Surface costs as much as it does. It doesn't have a great display and it doesn't have a cutting edge CPU (an Nvidia Tegra T30). It seems like Microsoft could've priced it lower in order to undercut Apple more robustly.

What do you think? Is $500 a good price for a 32 GB Surface tablet? Is Microsoft really going to be able to sell 5 million of these things in this quarter?