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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 BSMonitor on 3/15/2013 2:11:35 PM , Rating: 2
Not really sure what your point is in this thread. MS stock price isn't on the line when talking about Surface... They sold fewer than Android or iOS tablets...

And? They are not going to stop building them. And they will continue to put out the only tablet with legacy x86 support, and that alone makes it worth more to a lot of people than anything "free" from Google.

RT is a kneejerk reaction to pressure Intel to get Atom where it needs to be.. The ONLY tablet I would consider for doing anything useful is a Win 8 tablet with Atom or Core i7..

RE: But seriously...
By Motoman on 3/15/2013 2:55:58 PM , Rating: 2
The obvious point that you can't see is that Surface is trailing sales expectations by a wide margin.

I'm offering one explanation for it...the VAST majority of tablet users can do everything they want, and more, for 1/3 the cost of a Surface.


Not hard to see the point I'm making.

RE: But seriously...
By Mint on 3/15/2013 10:31:01 PM , Rating: 3
The point everyone else is making is that these trailing sales really don't matter. MS is in it for the long haul.

x86 tablets are the future.

RE: But seriously...
By nikon133 on 3/17/2013 11:13:07 PM , Rating: 2
I'm of the same sentiments, especially with Clover Trail tablets.

Here in NZ, CT Windows Pro tablets are not much more expensive than Androids, and offer best of both worlds - size, weight, battery life of iPad or Android, with extra functionality of PC.

But considering how much time took for Android tablets to start selling, while competing only with iPads, it is easy to predict that it will be even harder for Windows tablets - they compete with both iPads and Androids, after all.

So I'm not really discouraged with slow WinTab sales; in fact, I'd really be surprised if they were amazingly good. They have great uphill to overcome, but I believe they will get there. Only thing is, I think their entry point will be through enterprise, rather than consumer market. Businesses will start taking them in for obvious advantages, and that, in return, will give people chance to get firsthand experience with WinTabs and chance to like them, thus selecting them later on for their homes as well.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton

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