According to Microsoft, Surface pricing is "expected to be competitive with a comparable ARM tablet or Intel Ultrabook-class PC" (paraphrasing from the original

According to Microsoft, Surface pricing is "expected to be competitive with a comparable ARM tablet or Intel Ultrabook-class PC" (paraphrasing from the original presentation.) It's pretty clear that's closer to the $800 mark than the $200. If they want to compete with the iPad, they'll need to get down into the $500-$700 range, but I doubt they'd be giving that kind of price guidance if anything under $400 was remotely possible in Microsoft's own view - their estimate is probably a "best case" outcome given how incredibly fuzzy they were about it. (Arguably they could deliver at $1000 and claim they're still "competitive" with an Ultrabook.)