Microsoft Leaves Budget Laptop Market to OEMs Despite Apple’s MacBook Neo

Ostrum made the comments in an interview with Windows Central's Zac Bowden at this year's Snapdragon Summit. They show where Microsoft wants Surface to sit, and where it doesn't.

What Ostrum actually said​

Ostrum didn't start with Apple. He started with gaming PCs. Microsoft has never shipped a Surface gaming PC, he said, because OEMs already cover that market well, meet customer needs, and leave Surface with nothing to gain by joining in.

He then applied the same reasoning to the MacBook Neo. According to Windows Central, Ostrum said Microsoft saw the Neo coming "long before it showed up," asked itself whether Surface needed to respond, and "chose to let the OEMs play in that space to deliver lower-priced devices."

That wording answers a few questions:

• Microsoft wasn't caught off guard. Ostrum says the company knew about the Neo in advance.
• The decision was deliberate. Microsoft chose to leave the low-cost segment to partners. Nothing he said suggests it couldn't build a competitor.
• The door is still open. Ostrum said he has heard from press, retailers and partners that Surface should be in this market, and that Microsoft will take that feedback into account and "certainly consider some options." He then repeated the main point: Surface does not have to play in every field.

"We'll consider options" is not a product roadmap. It isn't a firm no either. For now, Microsoft has no low-cost Surface to put against the Neo.

Section summary: Microsoft says leaving cheaper laptops to partners is a choice, not a gap. Ostrum says the company saw the Neo coming and will listen to feedback, but he made no promises.

What Microsoft is passing on​

The MacBook Neo is a big deal in this price range. Apple unveiled it in March as a lower-priced addition to its laptop lineup starting at $599, as it looks to broaden its reach in a price-sensitive PC market while rivals face tighter supply of memory chips. It is powered by the A18 Pro chip, the same processor that debuted in the company's iPhone 16 Pro models in 2024.

Apple's own spec sheet lists a 13-inch display at 2408 × 1506 resolution and 500 nits, 8GB of unified memory, and 256GB or 512GB of SSD storage. The Neo has one 10Gbps USB-C port, one USB-C port limited to USB 2 speeds, and support for one external display.

Apple also cut some corners to hit the price. The cheaper model has no Touch ID on the keyboard, which only comes with the $699 512GB version, and the absence of a backlit keyboard could be one of the bigger practical limitations.

The price has also changed since launch, which matters when you compare it with Windows laptops. According to iTechGuides, the Neo launched in the United States at $599 for 256GB, but that is no longer the current new-retail starting price: Apple later raised it to $699 on June 25, 2026. Macworld reported the same increase, noting that even now that price has risen to $699, it is $600 cheaper than the current M5 MacBook Air. Education pricing was $499 with an education discount at launch. Check current pricing before relying on that number.

Section summary: The Neo launched at $599 and now starts at $699 new. It's a real Mac with real compromises, and it's aimed straight at students and budget buyers who might otherwise buy a Windows laptop or a Chromebook.

Can OEMs fill the gap?​

Windows Central argues that Microsoft's partner-first approach makes sense because Windows OEMs already sell strong alternatives. It names the Dell XPS 13, which it calls an "incredible deal" at $799, and the ASUS Zenbook 14. It says both cost about the same as a MacBook Neo and beat it in a number of key ways.

That claim needs some caveats:

• The prices don't quite match. $799 is $200 more than the Neo's launch price and $100 more than its current $699 price. The two are close, but not the same.
• Configurations matter. Windows Central didn't list model numbers, SKUs or which "key ways" the Windows machines win on. Laptop prices change a lot with configuration, sales and time. A Zenbook 14 "from $799" may be a very different machine from a higher-priced Zenbook 14 on the same shelf.
• Nobody ran a controlled comparison. There's no configuration-matched benchmark here showing the named Windows laptops beat the Neo on battery life, display, performance or build.

Our own view, based on general industry knowledge rather than testing: at around $700 to $800, Windows buyers do have good choices, often with more RAM than the Neo's fixed 8GB, more ports, and backlit keyboards. Apple's pitch is a consistent all-aluminum Mac experience in one simple package. Windows OEMs offer dozens of models with more variation in quality. When a Windows buyer shops at the Neo's price, the problem usually isn't a lack of options. It's sorting good machines from mediocre ones.

Section summary: Good Windows alternatives exist near the Neo's price, but "same price, better machine" depends on the model and configuration. Check the specific SKU before you buy.

Surface as a premium-only brand​

This is the bigger strategy story. According to Windows Central's sources, Microsoft now divides its Surface PCs into three internal tiers: Entry Premium, Premium and Ultra Premium. Even the cheapest tier, Entry Premium, reportedly starts above $1,000.

Those tier names and the $1,000 floor come from Windows Central's unnamed sources, not from a public Microsoft announcement or from Ostrum himself.

It wasn't always this way. Microsoft used to sell the Surface Go and Surface Laptop Go, both of which Windows Central says started well under $600. The outlet puts the shift down to component shortages that forced price increases and to a change in Surface leadership. Those are its explanations. Microsoft hasn't publicly laid out the costs or margins behind the move.

At the top of the range is the Surface Laptop Ultra, which Bowden says he tried earlier this year. Windows Central expects to hear more about it on October 7. Treat that as the date for more details, not a confirmed launch or ship date.

Section summary: Surface now appears to be premium-only, with a reported $1,000 minimum. The Go era of budget Surfaces looks finished for now.

Is this the right call?​

There's a reasonable case for Microsoft's approach:

• Partner relations. Microsoft makes Windows and sells it to Dell, HP, Lenovo, ASUS, Acer and others. Every cheap Surface competes with the companies that ship most Windows PCs. The gaming-PC comparison works because Microsoft has kept out of partners' main markets there for years.
• Margins and focus. Building a good $600 laptop during memory and component cost pressure is hard. The Reuters coverage of the Neo launch noted rivals were facing tighter memory-chip supply, and Apple can absorb that better than most because it designs its own chips.
• Brand clarity. A Surface lineup that starts above $1,000 tells buyers exactly what Surface is.

There are also good counterarguments:

• Apple chose to make one. The Neo shows a platform owner can build an affordable flagship-style laptop without hurting its premium models. Microsoft is leaving that showcase role to other companies.
• Education and first-time buyers. Students choosing their first laptop often stay with that platform for years. If the best-known "cheap and nice" laptop is a Mac, Windows loses mindshare with young buyers.
• Retailers and partners are asking. By Ostrum's own account, retailers and partners are among those telling Microsoft that Surface should compete here. When OEMs ask Microsoft to enter a market they supposedly have covered, that's hard to dismiss.

So is Microsoft right to stay out? Our view is that it depends on whether OEMs keep producing well-built Windows laptops at the Neo's price, not just laptops that are cheap. If they do, Ostrum's approach works. If buyers keep coming away with the idea that Apple owns the good-budget-laptop category, Microsoft may regret waiting.

What this means for Windows buyers and IT departments​

• Home buyers and students: Don't wait for a low-cost Surface, because Microsoft hasn't promised one. For a Windows laptop around $700 to $800, look at the specific model's RAM (16GB is the sensible minimum on Windows), whether the keyboard is backlit, battery claims and reviews, display brightness and ports.
• Schools and education buyers: The Neo's $499 launch education pricing is a strong benchmark. Compare it against OEM education SKUs and fleet management costs, not just the price of one device.
• IT administrators: Surface is clearly positioned as a premium business product. If your organization standardizes on Surface for its tight Microsoft integration, expect per-unit costs above $1,000 and budget for that. For cheaper deployments, the answer is still OEM business lines.

The bottom line​

Microsoft won't build a Surface MacBook Neo rival because it doesn't think it has to. Ostrum's reasoning is that OEMs serve this market, the same way they have in gaming. He left the door open, and the feedback from partners and retailers suggests the pressure on Microsoft is real. For now, though, Surface is putting its effort into premium machines like the Surface Laptop Ultra, and cheaper Windows laptops are up to Dell, ASUS and the other OEMs.