November 12, 2012

Microsoft's Surface RT - Fantastic or Modest Sales? Steve Ballmer Says it's One or the Other


In a sort of twist on “He was for it before he was against it,” Microsoft CEO Steve Ballmer was quoted today in France by Le Parisien as saying in an interview that sales of the recently released Surface RT tablet have been…”modest.”

Immediately following his uncharacteristic comment, Microsoft was quick to respond to the statement.

Microsoft sought to clarify what Ballmer had actually meant by what he said. Of course the overall spin here is that Ballmer was not actually talking about Surface RT sales, but rather about the efforts Microsoft itself has so far put into and behind marketing, store distribution and overall global availability of the tablet.

Here is a statement Microsoft gave Engadget.com when it asked about this:

“When asked about Surface, Steve's use of the term "modest" was in relation to the company's approach in ramping up supply and distribution of Surface with Windows RT, which has only been available via our online store and certain Microsoft retail stores in the U.S. While our approach has been modest, Steve notes the reception to the device has been ‘fantastic’ which is why he also stated that ‘soon, it will be available in more countries and in more stores.’”

So far the Surface RT has only been available in Microsoft’s own stores – which are as yet fairly few and far between, and through Microsoft’s website. There has been no other way to touch, test or otherwise buy one. Ballmer apparently mentioned to Le Parisien that sales have been affected by these issues.

Ballmer certainly did not give out exact sales figures, but he did also note that there are supply shortages of the Surface and that this is a good sign of demand. He also said that Microsoft will be dealing with the shortages by increasing capacity and global availability. 

Ballmer did also mention to Le Parisien that the Surface Pro, which has a higher-quality screen than the Surface RT will launch three months after the launch of the Windows RT Surface. Since the Surface RT launched on October 26 2012 we’re likely looking at the second half of January 2013 for that launch. The Surface RT base model with 32 GB of RAM sells for $499, or $599 with the Touch Cover. The Surface Pro will sell for probably at least twice the price of the Surface RT, and will come packaged with Windows 8 Pro, rather than Windows 8 RT.

We’ve covered the significant differences – and more importantly the underlying commonality – between the two operating system versions in a different article.

One specific issue that has cropped up – not something Ballmer talked over with Le Parisien, but may end up affecting sales – is that there have been reports of customers not being happy with the Touch Cover due to a manufacturing issue in which the membrane covering the keyboard was splitting at the top of the keyboard where it connects magnetically to the tablet. We’ve also heard that in some cases, the Microsoft logo was rubbing off.

The latter isn’t quite an issue – at least not compared to the splitting issue.

Microsoft has worked hard to deliver a well-built device that can come close to or match what Apple does in terms of build quality. Build quality is in fact a critically important element of Apple iPad (and iPhone) cachet – and it that cachet that drives much of Apple’s sales. It is critical as well for Microsoft to not fail on build quality – it must compete head to head with Apple here.

We’ve covered teardowns for Apple, Amazon and Microsoft that are worth reading to get a better sense of build quality issues.

It has been noted elsewhere that Ballmer has mentioned a desire to sell three million Surface RTs over the next three months. If true, that’s one very tall order we doubt Microsoft can pull off, even with the holiday season now about to go into full swing. We believe that if Microsoft can sell at least half that number it can consider itself as having had a successful launch – anything less and we’d have to think twice about it being a success.

We believe the company will pull it off.

We also need to consider the pure sale of Windows on partner hardware. One of the goals for building the Surface RT was to create a reference model that renders Microsoft’s vision in full – which we believe the RT has accomplished. If the hardware partners have significant sales over the next few months we’d have to also factor that into whether or not Microsoft had a successful opening run.




Edited by Braden Becker



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