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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: But seriously...
By synapse46 on 3/15/2013 11:34:15 AM , Rating: 2
I've been looking at getting $300 Asus tablet with the tegra3 chipset, I figure that is about the best tablet for the $$ but I have yet to be so inclined to make the purchase.

I played around with a surface, and unless you had a specific business program that would require the pro version, I couldn't see they value. The RT has some additional features that are nice, but for the average user it is too expensive and too bulky, IMO. Also, the surface keyboard that is like a "glorified microwave keypad" seems useless to me. I have also seen another surface with a more netbook style chiklet keyboard that would probably be more useful.


RE: But seriously...
By dgingerich on 3/15/2013 11:58:28 AM , Rating: 2
I HIGHLY recommend the Dell XPS 10 instead. It uses a Qualcomm dual core Snapdragon S4, which is much faster on single threaded apps, which is mostly what happens on tablets. Plus, the keyboard dock has an extra battery, giving extended battery life.

I use it in tablet mode when playing Angry Birds or reading Kindle books, but switch to netbook mode (docked) when using it at work for documents, email, and server remote consoles.


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