Microsoft is looking to challenge Apple and a slew of other competitors with its latest entry into the tablet market with Surface, but a report from Piper Jaffray suggests Microsoft faces an uphill battle for market share when compared to the iPad.
The research firm sent a representative to the Mall of America in Minneapolis, where Apple and Microsoft have stores across from each other, and found Apple’s foot traffic was nearly 50 percent higher during a two-hour observation period, in which no Surface tablets were purchased at the Microsoft store.
"On average, 3.5 items were purchased per hour at the Microsoft store (all but 2 purchases were Xbox games) compared with 17.2 items at the Apple store," Piper Jaffray analyst Gene Munster wrote in an investor note. "Also notable, was that there were no Microsoft Surfaces sold during those two hours."
The Piper Jaffray report also noted a 31 percent uptick in traffic to the Apple store, compared with the same period last year, which Munster attributed to interest in the recently released iPad Mini; however, supply problems could be negatively impacting the number of tablets Apple is able to sell. All told, Piper Jaffray said Apple sold 11 tablets per hour, compared with 14.8 iPads sold per hour last year.
"We believe the lack of supply of the 16GB versions had a measurable impact on Black Friday Mini sales," Munster continued. "While we remain comfortable with our [December 2012] estimate of 5 million iPad Mini's, the spotty supply tempers the upside potential."
NPD DisplaySearch Senior Analyst Richard Shim said in an October report that although Apple is expanding its partner base for the iPad Mini, issues with the display panel would likely limit initial shipments.
The 7-inch size range for tablets is expected to account for 28 percent of all tablets in 2012, up from 24 percent in 2011, according to a recent IHS report. Sales are forecast to rise about 100 percent this year, to 34 million units, up from 17 million in 2011. In 2013, the 7-inch share will rise to 33 percent, while sales will nearly double again, rising 96 percent to 67 million.
The IHS report noted the projections were conservative figures that could be affected not only by demand for a smaller Apple tablet, but how well Apple would be able to meet demand. High demand for Apple tablets in Asia could also drive sales to extraordinary levels.