Microsoft Sales of 1 Million Surface RT Tablets in Q4 Disappointing: UBS
Microsoft isn't exactly setting sales records with its Surface RT tablet. But that doesn't necessarily spell doom for the software giant's mobile ambitions.
The company's first stab at the tablet market, the Surface RT, failed to excite tablet buyers, according to Brent Thrill, an analyst for UBS. Thrill's estimate indicates an encouraging burst of early enthusiasm for Microsoft's tablet never coalesced into sustained sales momentum.
Business Insider reports that Microsoft sold just 1 million Surface RT tablets during the fourth quarter of 2012. The news arrives just as a big mobile electronics maker, Samsung, publicly turned its back on Windows RT. While the sales estimate represents a sharp decline from a previous forecast—as Thrill originally expected Microsoft to sell 2 million Surface RT tablets during the fourth quarter—it's a better turn than some other industry watchers expected.
Boston-based brokerage firm Detwiler Fenton predicted last month that Microsoft would sell a mere 500,000 to 600,000 tablets during the period. The brokerage blamed Microsoft's restrictive distribution strategy as a major detriment to sales.
During its first several weeks of availability, Surface RT could only be purchased via Microsoft's online or physical stores. With only 65 retail locations in the U.S. and Canada, consumers wanting to spend some hands-on time with the device faced a daunting trek to the nearest Microsoft Store brick-and-mortar location.
Last month, Microsoft reversed course and announced that Surface RT would soon start showing up at other retailers. Sure enough, Microsoft's tablet is now available in stores like Best Buy and Staples.
Nonetheless, the damage already appears to be done. Citing modest demand, Mike Abary, a senior vice president for Samsung, told CNET that his company was passing on a Windows RT tablet, at least in the U.S.
"When we did some tests and studies on how we could go to market with a Windows RT device, we determined there was a lot of heavy lifting we still needed to do to educate the customer on what Windows RT was. And that heavy lifting was going to require pretty heavy investment," stated Abary.
It's a blow to Microsoft, but Thrill notes that despite the gloom, hopes are higher for Microsoft's other tablet, the Surface Pro.
Unlike Surface RT, the soon-to-be-released Surface Pro runs Windows 8 on x86 chips from Intel. By Contrast, Surface RT is powered by Windows RT, a version of Windows 8 that operates on low-power, ARM-based processors, the type found in the most smartphones and tablets. And in supporting ARM, Microsoft had to make a major tradeoff.
Surface RT cannot run software written for x86 versions of Windows, making the device a nonstarter for enterprise buyers and consumers with substantial Windows software investments. Surface Pro, on the other hand, runs Windows 8 Pro, the same full-fledged edition of Microsoft's operating system that ships on PCs and notebooks.
Already, there are signs that industry is warming to Surface Pro.
Even as it sports a bigger price tag, loses a bit of its trademark sleekness and sheds a big chunk of battery life, Surface Pro is winning over some skeptics. Early reactions to the device range from cautiously optimistic to near adoration. Surface Pro's no-compromise approach to tablet computing has even led some to declare that Surface Pro is what Microsoft's first tablet should have been since day one.