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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 Labotomizer on 3/15/2013 3:47:54 PM , Rating: 2
I'm a Systems Engineer with a high requirement for virtualization. My current "laptop" is a 17" Elitebook mobile workstation with 32GB of memory running VMware Workstation with numerous VMs for various activities, including labs, demos and proof of concepts. The Surface Pro can replace everything about my laptop except for that. Fortunately my home workstation can do all of that, and even better than, my laptop can currently.

So you're right, RDP is a poor explanation since I didn't go into detail. But since I can do presentations, get good battery life, and dock it at the office and use it as my full time work system it's a perfect device. For me.

No other tablet can do that the way the Surface Pro can. I'm not saying that the iPad and Android devices don't meet a lot of people's needs, I get that they do. They don't meet mine however. And I've tried.

RE: But seriously...
By nafhan on 3/18/2013 4:10:18 PM , Rating: 2
So, it sounds like you are using it as your primary computer and doing a lot of Windows specific stuff locally. That's pretty much the ideal situation for a Surface Pro (if size/portability is important).

I also agree that "laptop" should be in quotes regarding your workstation. :) In my situation, I'm able to run that kind of thing remotely, and I prefer to keep it that way!

RE: But seriously...
By Taft12 on 3/19/2013 10:57:14 AM , Rating: 2
I'm a Systems Engineer with a high requirement for virtualization.

If this is the requirement to have a use-case for the Surface Pro, it's no surprise that there have only been 400K sold.

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