For that price range, I would find a laptop more useful, but that is me.
It's not a full laptop substitute, but that's the trade-off - 2 lbs of hardware vs the 6 lbs for the average laptop in exchange for decreased capabilities. Besides, the Surface isn't competing with laptops - it's competing with the Ipad and the various Android clones. The problem for Microsoft has been the proliferation of tablets that are now hogging device market share that used to go to PC's. Microsoft doesn't need to make a tablet, but it needs to have its partners make tablets based on a Microsoft OS and Office. The Surface is its entry into this new market.