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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 kleinma on 3/15/2013 5:43:31 PM , Rating: 2
Surface Pro is an awesome device. It is expensive, but it is an ultrabook that doubles as a tablet, not a tablet that doubles as a pseudo half baked laptop.

The touch cover is crap, the type cover is required if you want to do any real typing on it. The combination of mouse/keyboard/touch is awesome to have.

It is only going to appeal to those who need to do real windows work, not to those just looking for a tablet to watch HBO GO and netflix on.


RE: But seriously...
By lawrance on 3/17/2013 11:14:25 AM , Rating: 2
If you need a tactical keyboard, a mouse or trackpad, then why buy one of these at all? Why not just buy a real laptop that has considerably more power? I really think MS is missing the point of tablets. Thin, light, inexpensive but great for consuming content on the road or on the couch. Dedicated professional apps make tablets great for business use out in the field too.


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