Is Microsoft's Surface Doomed Like Zune?

 
 
By Pedro Hernandez  |  Posted 2013-03-15
 
 
 

The last time Microsoft tried to play catch-up with hardware from Apple, it was forced to pull the plug on its Zune player. This time around, analysts fear that the Surface may suffer a similar fate.

Bloomberg is reporting that according to sales insiders, Microsoft sold an underwhelming number of Surface Pro tablets since the buzzed-about Windows 8 Pro slate launched Feb. 9. "Microsoft has sold little more than a million of the Surface RT version and about 400,000 Surface Pros since their debuts, according to three people, who asked not to be named because sales haven't yet been made public," said the report.

To date, Microsoft has sold 1.5 million Surface units (both RT and Pro), far less than the company anticipated. Microsoft reportedly ordered about 3 million Surface RT tablets expecting sales of 2 million during the holidays.

By comparison, Apple's iPad sold like gangbusters.

On Jan. 23, the company reported that it sold 1.7 million iPads per week during the fourth quarter of 2012 (the first quarter of 2013 under Apple's fiscal year). In total, the company sold 22.9 million iPads during that period.

Emboldened by such good results and with an eye toward enterprise IT departments, Apple decided to challenge Microsoft on its own turf. On Jan. 29, the Cupertino, Calif.-based company announced a business-friendly 128GB version of the iPad that was set to go on sale days before the Surface Pro.

For Microsoft, the pressure is mounting and things are looking bleak for Surface in 2013, according to JMP Securities analyst Alex Gauna. He told Bloomberg, "It's pretty clear that things were bad entering the year, and at least for the moment they're getting worse. The path to a successful Surface, in the same way that they were successful with Xbox, is not very clear to me right now."

IDC Research Director Tom Mainelli places the blame squarely on Surface RT, which can't run the massive Windows software library due to its ARM-based processor. Surface Pro, running on an x86-based chip from Intel, can run Windows.

"Microsoft's decision to push two different tablet operating systems, Windows 8 and Windows RT, has yielded poor results in the market so far. Consumers aren't buying Windows RT's value proposition, and long term we think Microsoft and its partners would be better served by focusing their attention on improving Windows 8," Mainelli said in a statement.

Despite a rosy forecast for both Android and Apple iOS tablets, IDC expects Windows tablets to gain a mere 7.4 percent share of the market by 2017.

It doesn't help that Microsoft has yet to jump on the small tablet craze; both Surface RT and Pro are considered full-sized slates. Due to the popularity of small tablets (8 inches and under), the research group recently revised its tablet shipments forecast for 2013 upward from 172.4 million units to 190.9 million.

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