Microsoft announced additional details of its anticipated Surface tablet, including its price – at US$499 for the base 32GB version, the company is competing on a similar level to Apple’s latest iPad.

But anticipation is building that Apple will launch a new, smaller version of the iPad, which should provide a lower-price entry point to the iOS tablet market – also increasing pressure on Android devices such as Samsung’s Galaxy Tab line.

While Apple has not confirmed its plans, invitations have been sent to the media for an event next week (October 23). It is expected to unveil an iPad with a screen of 7 inches to 8 inches, which would be more portable than the current 10-inch display unit.

Assuming that Apple prices the new device at between US$250 and US$350, as appears to be the current consensus opinion, this will not only provide additional competition for Surface, but will challenge a number of Android devices available at a similar price.

So far, numerous vendors have found that mid-price Android units are a difficult sell, with the latest high-profile launches – such as Google’s Nexus 7 – instead taking the low-cost route.

An issue that Microsoft would have needed to consider is the pricing of Windows RT-powered tablets from third-party vendors. With the company looking to create a multi-vendor ecosystem, it could not afford to undercut rivals to the point where Windows RT devices become commercially unviable for its partners, meaning its own device is forced to be a high-end proposition.

As Amazon has shown, there is the potential in the tablet market to offer a device at close to cost price, with the aim of generating profit from the sales of supporting content and service. However, with Microsoft having to take into account the plans of its partners, it has been forced into a more traditional pricing model.

Microsoft has named Asus, Samsung, Dell and Lenovo as planning to build devices powered by Windows RT.

At Microsoft’s Worldwide Partner Conference earlier this year, Steve Ballmer, Microsoft’s CEO, described Surface as a “design point”, noting “the importance of the thousands of partners that we have that design and produce Windows computers will not diminish”.

He also said that the company “may sell a few million” Surface units, indicating that either the company does not see it as an out-and-out commercial play, or that it is deliberately setting low expectations. In contrast, some analysts have said that Apple will sell around 5 million units of the small-screen iPad in the first quarter after launch.

Microsoft is listing three versions of Surface: a 32GB base unit (US$499), a 32GB unit bundled with touch keypad cover (US$599); and a 64GB version with touch keypad cover (US$699). Unlike Apple’s iPad, no version is listed with integrated 3G (or LTE) connectivity.

Surface will be available for purchase from 26 October 2012, from Microsoft’s own stores in the US and Canada, and online in Australia, Canada, China, France, Germany, Hong Kong, the United Kingdom and the United States.