Asus Eee PC 2G Surf at $299 Intentionally Overpriced?

The following is actually my response to a comment on one of the posts, but I decided to re-post it. It is a discussion on the announced US pricing for the Asus Eee PC 2G Surf, which at $299 is $100 less than the high end Asus Eee PC 8G. Given the wide disparity in features, either the 2G Surf is overpriced or the 8G is underpriced. -

I think the scenario is more likely Asus is intentionally pushing the higher end model(s) since the profit margin is definitely much lower on the 2G Surf. Remember a few weeks back before the launch Asus already gave some indication that it will be producing mostly higher-end models, at least, initially.

Personally I feel the 2G Surf at $299 is intentionally overpriced. I am not sure at what contract price Asus was able to procure the flash for their initial production run but I doubt the difference (due to price increase) would be as much as $50, which is the difference between the anticipated $249 price and the just-announced price.

Once NAND pricing stabilizes and goes down, I'd expect the 2G Surf to be sold at $249. And when competing products start appearing, expect the price to go down further but not by a lot more.

The way I see it, Asus took a gamble by making the introductory price of the Asus Eee PC close to what the price would be at the maturity phase of the product's life cycle. They did this to widen the price gap between the Asus Eee PC and what we consider as conventional notebooks. The bigger the gap, the greater the wow effect. Thus, the introductory $199 pricing. And true enough, at that price (and features) it got a lot of people excited. Heck, I was excited enough to start this blog. :)

Asus could afford to this because it does not have any R&D cost to recover. Remember the Asus Eee PC simply follows the Intel Classmate PC reference design. Moreover, practically all the parts are readily available off-the-shelf components.

What caught Asus off guard was the NAND shortage that resulted in significant price increases. Consequently they had to adjust prices (and specifications) in an effort to keep the product line appealing enough in terms of giving value for money. And given the resultant feedback (and criticisms) it seems they are still trying to find the right combination to ensure the Asus Eee PC becomes the best seller that it deserves to be.