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Analysts are now lowering their future sales forecasts

As iOS and Android-powered tablets continue to be trailblazers in the market, Microsoft's Surface is having a hard time finding its place -- and it shows in analyst expectations.

Bloomberg source anonymously revealed that Microsoft has sold 1.5 million Surface tablets to date. More specifically, the company has sold a little over a million Surface with Windows RT tablets (features the Windows RT version of Windows 8 specifically for ARM processors) and about 400,000 Surface with Windows Pro tablets (features the full version of Windows 8 and an Intel Core i5 processor). 

These numbers are not exactly what analysts expected this late in the game. Brent Thill, an analyst at UBS AG, had previously predicted that Microsoft would sell 2 million Surface RT tablets in just the December quarter.

Now, analysts are lowering Surface shipment estimates for the current quarter and beyond. Brendan Barnicle, an analyst at Pacific Crest Securities, lowered his Surface sales projections from 1.4 million to 600,000 for the current quarter.

Barnicle also reduced his Surface sales estimate from 7 million to 5 million for fiscal 2014. Rick Sherlund, an analyst at Nomura Holdings Inc., decreased his estimate for the PCs and Windows-based tablet market from a growth of 5 percent to a decline of 1 percent.

Why is the Surface such a flop so far? Reports cite consumer unfamiliarity with the Windows 8 OS, Surface's fail at successfully packaging the power of a PC combined with the ease-of-use of a tablet, and fewer apps as some reasons. A high price point would be a fair reason as well (the Surface RT is $499 for 32GB and $599 for 64GB while the Surface Pro is $899 for 64GB and $999 for 128GB).

Currently, the Windows Store has a little over 47,000 apps. Apple's App Store has over 300,000 apps for the iPad. In the quarter ended December 2012, Apple sold 22.9 million iPads and it accounted for 51 percent of the tablet market.

However, Android tablets are expected to give the iPad a run for its money this year. According to IDC, iPad shipments are expected to make up 46 percent of the tablet market for 2013, down from that 51 percent in 2012. Android-powered tablets are expected to increase their market share to 49 percent in 2013, up from 42 percent in 2012.

Back in December, Boston-based brokerage firm Detwiler Fenton said that Surface's main problem was distribution. Customers could only buy the Surface with Windows RT tablet at Microsoft Stores, and the issue with that is there's only 31 of them, with another 34 smaller Microsoft kiosks around the U.S. The lack of exposure at places like Best Buy and Staples was hurting the tablet after its Oct. 26 release.

This was resolved later in December, when Microsoft started allowing third-party retailers to sell the Surface -- near the end of that quarter.

Source: Bloomberg

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RE: No market/Late to market
By Labotomizer on 3/15/2013 11:29:29 AM , Rating: 2
The Surface Pro can do a whole lot more than any other tablet out there. Just sayin...

RE: No market/Late to market
By Spuke on 3/15/2013 11:58:36 AM , Rating: 2
X2 There is a CLEAR difference between the Surface Pro and every other tablet out there. You guys have to make the distinction on which Surface you're referring to,

RE: No market/Late to market
By Solandri on 3/15/2013 4:04:00 PM , Rating: 2
There's a clear difference between the Surface Pro and the ARM tablets. But the difference between other Intel+Win7/8 slate tablets is a lot fuzzier. My sister was in the market for a Surface Pro, but was really turned off by the lack of repairability. Sealing the entire thing with glue is semi-acceptable on a $200-$400 appliance tablet. Not so much on a $1000 full-blown PC which happens to be in the shape of a tablet. Once the warranty is up, you basically have to think of it as being disposable.

RE: No market/Late to market
By UpSpin on 3/15/2013 12:48:32 PM , Rating: 2
I own such a Windows tablet (convertible) since several years (btw. Surface Pro tablets (slate like) aren't anything new (Fujitsu Stylistic, Motion Computing, ...) and no one bought them in the past)
And you know what? Windows is crap as a tablet OS.

Yes, you can run much more powerful programs on a x86 system running Windows 7 or 8, that was my motivation to buy the tablet PC, so I could use it as both a notebook and as a tablet. I had a use for it and it was worth the money. ($2500)

However, the software 'Windows' is not touch optimized. You can only use it with a pen.
No, Metro UI isn't the solution, because you buy the Surface Pro to run the powerful programs, which don't have a Metro UI!!! So you're stuck with the Windows 7 style user interface which is crap on a tablet PC. Office is nearly impossible to use on a tablet. Sketchbook, Photoshop, both great programs for a pen based tablet, but the majority of people does not own such expensive programs. OneNote is full of bugs and not suited for heavy note taking. You have to buy further expensive rare third party programs to make a good use of it. But forget finger input, it won't make fun.

So Windows and the majority of its programs don't work on a tablet PC. Additionally is a Windows tablet expensive, heavy, noisy, hot, short battery life, slow, ...

So stop talking bullshirt how much better Surface Pro is compared to any other tablet. It's worse, much worse, because the OS, Intel hardware, and programs aren't optimized for a use as a tablet.

Android and iOS tablets with slightly less powerful programs are thousand times better than Surface Pro.

It's a niche product, just as all the previous Windows tablet PCs were, Microsoft hasn't changed anything fundamental with Win 8 and Surface Pro which could change this.

RE: No market/Late to market
By Nortel on 3/15/2013 2:31:53 PM , Rating: 2
I could not agree more. This concept has been around for ages. All that's changed is the detachable keyboard, multitouch screen and Windows 8. Reviewers were given these in droves with both keyboard options for free and still couldn't produce brimming reviews.

With the success of Android and iOS tablets it shows people have gotten past the reliance of a "real computer" to do the same quality of work. Imho, if you do not have an express need for the wacom stylus it quickly becomes cumbersome to use. Using it for all interaction demonstrates how the designers have failed at creating a proper tablet device.

RE: No market/Late to market
By 91TTZ on 3/15/2013 1:05:20 PM , Rating: 2
Yeah, but they marketed it to a really niche audience. Sales will be very low.

Keep in mind that you can buy a laptop that is faster than the Surface Pro for about $400. When Microsoft wants to show the Surface being productive they show it with an add-on keyboard. If they want to make it really productive they'll show it with a mouse, too. Now you have a laptop that performs about as well as a $400 laptop except it costs over $1000.

A customer can get a $400 laptop and 2 $300 Android tablets for that price and have multiple devices for the whole family that cater to different needs.

There's reasons that "all-in-one" contraptions never seem to catch on. You can get an Amphibicar that acts as a car and a boat. You can get a flying car that acts as a car and a plane. Both of these things are more expensive than the vehicles they're intended to replace and don't do the functions as well.

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