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TheStreet Open House

Microsoft Discounts Surface Pro 2 Tablets In An Effort to Boost Sales

NEW YORK (TheStreet) -- Following the release of the Microsoft (MSFT - Get Report) Surface Pro 3 tablet, Microsoft is offering slight discounts on the remaining inventory of the Surface Pro 2, i an effort to boost revenue from its tablet-laptop hybrid.

Microsoft will cut $100 to $200 off the price of last year's tablets, depending on the configuration. Consumers will now get the 64GB model for $799, down from $899, a $100 discount. The high-end 256GB model has been reduced to $1,599, $200 off the original price. The reductions amount to 10-11% off original prices. Retail sales of the new models will begin by the end of the month. 

Though Microsoft does not release how many Surface tablets it sold, the Redmond, WA.-based tech giant does revenue figures. In the calendar first quarter of 2014, Microsoft reported revenues of $500 million from Surface tablets. That was down from $893 million in the prior quarter, but up nearly 50% year over year.

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Microsoft shares were losing 1.03% to $41.25 in midday trading in New York.

Gartner Vice President Steve Kleynhans believes Microsoft's offer makes sense. "Overall, Surface is a small part of Microsoft's business specifically the tablets males-up only a fraction of a fraction," Kleynhans said in an interview. "Offering small discounts on the last model gets Surface tablets into someone's hands and gets them using Windows 8. The new Surface 3 obsoletes what's left of Surface 2 stock and long term that's a plus."

Dubbed a MacBook Air killer by some, the new Surface Pro 3 tablet starts at $799 for the 64 GB model with 4 GB of RAM and an Intel (INTC) i3 processor. The high-end models run on Intel i7 processors, contain 8GB of memory and are set to retail for slightly less than $2,000. These configurations will reach stores by August.

The first Surface Pro 3 tablets that will reach consumers will be a mid-range configuration with an upgraded Intel i5 processor, 128 GB of internal storage and will retail for $999.

-- Written by Gary Krakow in New York. To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's Senior Technology Correspondent.

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