Technologizer

Nobody Should Be Surprised if Surface Sales Are Modest

A research firm has slashed its sales forecast for Microsoft's tablet. It should never have been large.

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Brokerage firm Detwiler Fenton says that Microsoft’s Surface tablets are selling far more poorly than expected, and that the biggest problem is the fact that the only retail outlets that have them are Microsoft’s own stores. As All Things D’s John Paczkowski reports:

Detwiler Fenton, a Boston-based brokerage firm, said in a research note today that Microsoft is likely to sell just 500,000 to 600,000 Surface RTs in the December quarter, far below its previous expectation of one million to two million. The reason: Microsoft’s tablet strategy is in “disarray.”

“Lack of distribution is killing the product,” Detwiler Fenton explained. “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.”

As I wrote last week, I don’t understand how anyone — including Microsoft and Detwiler Fenton — could ever have thought Surface would sell in vast quantities as long as the only place to see one in person is the Microsoft Store chain, which has fewer than a hundred locations even when you count the temporary outlets which the company has opened for the holidays. I’m just a humble tech pundit, not an expert on retail distribution, but the math never added up, and I continue to think that Microsoft’s in-house estimates may never have involved seven-digit unit sales in just a few months.

(I’m also confused by Microsoft’s ad campaign for Surface, which never mentions the fact that it’s not available from any of the merchants you think about when you think of buying a PC.)

Assuming that Surface doesn’t turn out to be a brief-lived folly, I think it pretty much has to be far more broadly available, and soon. Microsoft can’t build Microsoft Stores fast enough to reach the scale it needs. Best Buy and its rivals would presumably love to get their hands on Surface, even if selling it will tick off HP, Acer and other purveyors of Windows-based computing devices. So if the tablet reaches its first birthday as a Microsoft Store exclusive, I’ll be startled.

5 comments
DanMan'99
DanMan'99

I thought it would succeed greatly when I first heard about it. Apparently, Microsoft was dumb enough to make it their own exclusive, which, if that error isn't fixed, will probably lead to it's early demise.

ZainiChia
ZainiChia

Hm although I agree that no one should write off Windows 8 and Microsoft's general direction so early, I think that surface is starting to show signs of being a flop. Sure retail distribution and all that nitty-gritty details matter, but I'm a believer of the simple; if the product was really, really good, all these would have worked itself out. Microsoft stores would have sold out all their Surface's, and the online orders would be going crazy, which would have made microsoft expand their production and distribution, so on and so forth. But it hasn't been a great product, and haven't caused a buzz among customers, despite LOTS of marketing; an even a thumbs up by oprah! Surely that's enough to get the word around that the Surface EXISTS; so, people know it does exist, but it just hasn't caused much of a hit among customers.

Microsoft needs a follow up to their tablet strategy quick, before this whole tablet thing becomes the whole iPod and Zune story again.

GaryRMcCray
GaryRMcCray

How dare you remove my perfectly legitimate discussion of the short comings of of the Surface RT, It's Operating system and its crummy advertising?

Microsoft has laid a big egg with this in every way possible and to remove or allow my commentary to be removed is to show favoritism to the very company you are discussing.

If it was removed because it was flagged, it was almost certainly done by executives of Microsoft because they are so embarrassed about how they have handled both the Surface and Windows 8 and they figure that by eliminating free speech maybe it will benefit them.

If you did this Harry, shame on you!

marshall.staxx
marshall.staxx

"So if the tablet reaches its first birthday as a Microsoft Store exclusive, I’ll be startled."

If Surface reaches its second birthday, no matter how many sales outlets, I'll be surprised. It's a poorly conceived product: a tablet made to act like a PC, at a time when PC sales are in steady decline. Just squishing a Windows PC into a flat slab is not going to breath new life into the PC paradigm.

worleyeoe
worleyeoe like.author.displayName 1 Like

@marshall.staxx Um, no! You obviously have not used it or understand its paradigm. In the real world, people want a device that is portable and deftly handles touch based apps and browsing the Internet. The Surface tablet is as good or better doing this than any other device on the market. Sure it doesn't have 500K apps yet, but 20K in about 6 weeks of availability is pretty good and exceeds the Mac apps store by 7K apps already.

Next, the full desktop is their waiting to use the included Office productivity suite. Again, in the real-world this a valuable strength not  weakness. Certainly, an argument can be made that they are overpriced or at least the type / touch covers are at least. In time, we may see more desktop apps come to WinRT, but that's what the Surface Pro is about to pull off in less than two months.

Finally Harry's point is well taken and is a valid question. But from day one, there have been MS channel partners that claim MS didn't intend to sell tons of these devices out of the gate. So this appears to be possibly true.

As a little homework, go look up the Acer Iconia 510. It has the new Intel Clover Trail CPU that gets about 10 hours of battery life and literally runs circles around anything available in the ARM space, including the latest and greatest A15's. It runs Windows 8 Pro and will cost about $400 less than the Surface Pro that is to be released late January 2013. It is an absolutely fabulous device that can, for many people, function as a full laptop replacement yet run that touch friendly Modern UI in its tablet mode, undocked from its dedicated keyboard / trackpad.