Consider for a moment who is affected most by (almost any) pricing change to Office. I'd wager that enterprises/corporations aren't affected as much, or perhaps it is the case that the dynamics of how they'd react to pricing changes to Office are different from the dynamics of the consumer market and how it would adapt to such changes
Consumers - home users, students and the like - will not stop wanting Microsoft Office. Technology savvy users will use other options - and there aren't a dearth of alternatives to Microsoft Office really. Nevertheless, the general populace will simply not embrace an alternative as the canonical choice - they will continue wanting Office. And Microsoft will provide it to them for free.
This overall approach, of driving away users from traditional Office towards SkyDrive+Office Web Apps, or towards Windows RT, will work in favor of Microsoft's desire to sell more tablets, drive developers towards the Windows RT platform and convince them to build apps for it, and to compete with Google effectively (at least on the Docs front). I doubt that the subscription model will put a dent in it's coffers - because I suspect that the revenue they have historically accrued by selling boxed versions to families and students was likely a blip compared to enterprise revenues - and thus expendable towards the furtherance of other goals.
I've made couple of big assumption in this analysis, of course. One is that Windows RT will provide Office for free. So far, the only thing we know is that Windows RT will debut with the RC version of Office RT. I don't believe that there has been any announcement made about free upgrade to the final version of Office RT when it becomes available. I'm assuming that would be the plan, because the current plan of record insinuates it strongly as such, and it is probably not in the best interests of any company to use a cheap tactic like this to force customers to pay for an upgrade. Another assumption - which I believe to be reasonable - is that driving away consumers from buying the Desktop version of Office (or receiving it through a subscription) will not be a loss maker. Given these two assumptions, I believe that the remainder of my analysis works ok.
but I'm not sure if they understand how much money a successful product is going to cost them.
It's a toss-up, really. They succeeded with XBox despite entering a new market crowded with leviathans, and they are failing with Windows Phone despite having a real first-mover advantage. They have succeeded in building very good first-party peripherals - keyboards (esp. ergonomic ones) and mice, and they did terribly with Zune. Microsoft Router (for those who can remember their 802.11b offering) was one of the best in the market, but they stopped building more when other companies started flooding the market with quality offerings (arguably, it was one of their better 'premium' offerings that is, today, reminiscent of the Airport Extreme concept - but very different from Apple's rendition). They've succeeded in launching a disruptive product like Kinect, but failed in their core competencies in the past (for e.g., Windows Vista). So I think it's a mixed report - Microsoft's track record neither predicts failure for Surface, nor does it predict serious success.
I'm inclined to give them the benefit of my patience and wait to see if it's truly a good device. The XBox (and Zune) experience specifically has indeed given them the experience needed to understand what it takes to succeed (and fail).
...people become Democratic when they have faith in the system of checks-and-balances and believe in the common good..
I'm curious when according to you do people become Liberal in the modern American sense? Or did you mean Democrats when you wrote Democratic ?
These are not conservative leaning. They are religious zealots.
Calling them religious zealots makes it seem like all religions are on an equal footing in this discussion. We are talking specifically about Christianity and it's zealotry. Other religions - including other Abrahamic religions - are fairly uninvolved in these instigations, and therefore haven't earned very much criticism on this matter.
There is a current framework in the US consisting of philosophy, policies, laws and regulations that answers each of these questions. In order to elicit reasonable responses, it's important to describe the status quo, describe where it's failings are, and ask for ideas for incremental or radical improvements.
Do not simplify the design of a program if a way can be found to make it complex and wonderful.