For $700 you get a device made by Microsoft. A premium device made with premium materials and components. They also almost had to price the Surface RT higher so to not undercut their partners (Dell, Asus, Acer, Samsung etc) who also have RT devices.
Its no different to saying if Apple were to allow other companies to manufacture iOS devices, they would certainly maintain a high price tag and create a premium iPad to lead by example.
As for its intended purpose? Its an RT device, a companion device as previously mentioned in this thread. If any expectations are above this then forgo the RT and get the Pro or any other Windows 8 device.
But for students wanting to have a more productive device than an iPad or Android tablet, the RT is perfect. For the average consumer who wants to check email, browse the internet and consume media the RT based devices will suffice for about 95% of them.
And please stop complaining about apps, this is a broken record. The RT devices have been out for 6 weeks maybe? The apps will come, this has to be understood. And they are already coming fast. I wouldn't be surprised if MS has caught up to Apple and Android by this time next year. (minus the garbage apps).
I read in an article that MS expects to break 100k apps by January 2013, and that they are averaging between 300-400 new apps per day since the launch.