Microsoft Surface Tablet Sales Are Slow To Take Off: Reports5:29 PM EST Wed. Dec. 05, 2012
Microsoft's Surface tablet may not be the hot seller the company was counting on, and the lack of channel distribution may be part of the reason why.
In a bit of good news for Microsoft, however, market researcher IDC is forecasting that Windows will capture a bigger share of the tablet market during the next few years -- but it will remain far behind Apple's iPad and Android-based tablets.
Detwiler Fenton, a Boston-based brokerage firm, issued a research note Tuesday that predicts that Microsoft is likely to sell fewer than 1 million Surface tablets in the current quarter -- with just 500,000 to 600,000 a more likely number.
HIS iSuppli is slightly more optimistic, forecasting that Surface sales will be around 1.3 million units in the fourth quarter, analyst Rhoda Alexander was quoted as saying in an interview with CNET.
Microsoft has been quiet about Surface sales since the tablet, specifically the ARM-based device running Windows RT, began shipping Oct. 26. Microsoft is scheduled to begin selling an Intel-based version of Surface running Windows 8 sometime next month.
The tablets themselves have generated mixed reviews. Some observers have pointed to what they see as the product's high starting prices -- $499 for the Windows RT tablet and $899 for the Windows tablet -- as holding back demand for the product.
But, analysts are also pointing to Microsoft's decision to sell Surface only through its website and its own retail stores as potentially stunting sales. "Lack of distribution is killing the product," the Detwiler Fenton note said. Saying that Microsoft's tablet strategy is in "disarray," the report adds: "Mixed reviews and a [$499] starting price tag certainly don't help, but lack of retail exposure at Best Buy and others is severely depressing sales."
Microsoft currently has only 31 stores in the U.S. and 34 smaller holiday specialty stores.
NEXT: IDC Forecasts Windows Tablet Sales Growth Through 2016
IHS iSuppli's Alexander noted that by the end of the quarter Surface would have been on sale for only two of the quarter's three months and the quarter still has several weeks to go.
In October the Wall Street Journal reported that Microsoft planned to produce between 3 million and 5 million Surface tablets in the current quarter. The report was based on information gleaned from manufacturers that supplied components for the product.
But if the analysts' predictions are accurate, the demand for Surface tablets won't come close to those production numbers.
By way of contrast, Apple sold 3 million units of its fourth-generation iPad and iPad mini tablets in a three-day period last month.
IDC, in its report, now forecasts that worldwide tablet PC sales will reach 122.3 million units, up from an earlier forecast of 117.1 million units. The market researcher increased its estimate because of faster-than-expected Android tablet sales and "robust demand" for the new iPad mini.
For 2013, IDC is predicting that worldwide tablet sales will hit 172.4 million units.
Windows-based tablets, including Microsoft's own Surface and tablets manufactured by other vendors, will account for only 2.9 percent of tablet sales this year, IDC said. That compares to Apple's iPad, which will dominate with 53.8 percent of all tablet sales, and Android tablets, with 42.7 percent.
IDC is predicting that Windows-based tablets will account for 10.3 percent of the tablet market in 2016 -- a compounded annual growth rate of nearly 70 percent. But that will still be far below the iPad's 49.7 percent of the 2016 tablet market and Android's 39.7 percent.
PUBLISHED DEC. 5, 2012