Yes, but you can stick a 32 or 64GB SD card in it(or swap through many as needed) because it has an SD card slot. You can even put in USB flash drives since it has a full size powered USB port with hub support. Hell,you could connect a 2TB portable USB drive and it would work(at the expense of battery). Try doing that with an iPad or Nexus 7 or even the Nexus 10. Google's devices are supposed to be more open but I cannot understand why they want to force upsell you to the more expensive options to add additional storage by omitting MicroSD slots.
The Surface Pro will probably have a SSD that can do over 10x that.
Random access speed is what matters for apps, and even tablet solid state storage are much faster than SD cards. The SD should be fine for audio and video though.
The point still remains that they advertised the tablet as being higher value, when it's not. You can get a Nexus 10 with 16 GB of storage and a much higher resolution than the Surface for $400.
The 'value' you speak of in tablets is not in the volume of space available but in the overall experience. I can't say I've ever heard a "real user" express how they wished they have more physical space on their tablet or smartphone. It's a nice line item on a spec sheet to hold over your competitors but how many users actually care?
You have never heard a "real user" (and remember, you and I are "real users" as well; you don't stop being a real user just because you are technically inclined) complain about having run out of space and having to clear off space? About not being able to fit all of their music, photos, videos onto their MP3 player, phone, or tablet?
I've certainly encountered that. And I can imagine people saying "hey, this has 32 GB of space, my current device only has 16, this will allow me to fit twice as much", without realizing that a full half of that space is not actually available.
You can easily drop in a SDXC card in the Surface if you need additional storage, unlike the other main alternatives like the iPad and Nexus tablets. You can load up any number of movies to take on a trip on microSD cards and swap them in and out. What do you do on the other tablets without the Microsd slot when you run out of storage?
16 vs. 32GB is more important for the iPad because you're permanently stuck without recourse with that storage forever. Not so with the Surface. Somewhat ironic that someone who was complaining about argument quality missed that key point.