This is the same B.S. that happened with the Xbox 360 hard drives.

In 2006 Microsoft sold a 20GB hard drive for $120 (which could have bought at least a non-branded 100 GB hard drive)

When you used it with the 360, the hard drive would only report 14 GB because 6GB were used for the OS.

http://support.microsoft.com/kb/911593

FYI Apple's operating system takes up 1GB, so this is relevant because a 32GB Surface has a much usable storage as a 16GB iPad (source: http://www.businessinsider.com/microsoft-surface-storage-siz...)