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.