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Analyst Slams Surface's Chances, Urges OEMs To Boycott Windows RT

Canalys, the market research firm that counts iPads and other tablets among PC shipments, released numbers on Tuesday putting Windows' overall market share at a "new low of 73 percent."

In spite of some bright spots for Windows, the firm doesn't see the Microsoft Surface pulling Windows out of a market share dive any time soon and its analysts are encouraging OEMs to demand better pricing from Microsoft on Windows RT. The slide represents a 9-point share loss in the year since Canalys put Wintel's Q2 2011 share at 82 percent.

Microsoft is slated to release an ARM-based Surface running Windows RT with Windows 8's general availability on Oct. 26 and a Surface Pro running Windows 8 Professional three months later.

"The information available to date suggests the prices of both will be too high to capture significant market share, and a direct sales approach will prove inadequate. We expect the Surface pads to have a similar impact on the PC industry as the Zune did in portable music players," Canalys analyst Tim Coulling said in a statement.

Canalys does not expect the launch of Windows 8 to arrest Microsoft's market share decline until Q3 2013 at the earliest.

The firm also says it has advised PC OEMs to postpone launching Windows RT devices until Microsoft reduces the price for the underlying operating system.

Meanwhile, another Canalys analyst suggests those PC OEMs will be licking their chops for what, in his view, will be Microsoft's inevitable failure with the Surface.

"Microsoft has upset some partners by bringing its own hardware to market," says Chris Jones, Canalys vice president and principal analyst. "Marketing, distributing and servicing such hardware profitably is hard. Once the Surface makes a material dent in Microsoft's P&L, it will need to repair relationships with PC vendors, who are already preparing lists of demands."

In addition to reducing OEM prices for Windows RT, Canalys warns that Microsoft will need to subsidize touch-panel production costs by $50 to $100 per unit to "kick-start the market" by helping the OEMs hit mainstream price points.

The bad news in the second quarter for Microsoft is Apple's 60 percent shipment growth to 21 million units (iPads and Apple desktops and laptops), HP's 11 percent drop to 13.5 million units, and Dell's 11 percent drop to 9.6 million units, according to Canalys' figures.

The bright spots Canalys referred to are Lenovo's 27 percent shipment improvement to 13.1 million units and Acer's 4 percent growth to 10.7 million units.

Posted by Scott Bekker on July 31, 2012 at 11:58 AM


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Reader Comments

Tue, Sep 25, 2012

iPad, Surface, Android, who cares! This is the post-PC era. My data is in the cloud and I can access it from any device. I will buy the one that offers the best price/performance. Right now that's Android. For the price of one iPhone and one iPad I can have an Android phone, a 7" Android tablet and a 10" Android tablet and I am covered whatever the need. Microsoft is too late to the party. Only diehard M(orons)S fans will touch their tablets.

Thu, Aug 2, 2012

If Windows 8 and the quest for tablet relevance will achieve anything at all, it's only the later Intel version of Surface that stands even the slightest chance of avoiding the fate of Zune and Microsoft Bob. By the comments posted thus far, at least a handful of the WinRT tablets will be sold to the unsuspecting, but that's still a lot of money for little more than something on which to place drink in protecting one's furniture.

Thu, Aug 2, 2012 Karl Austin, TX, USA

Canalys seems to have difficulty is expressing analysis versus jaded opinion. Stick with the facts and not speculation. Admittedly MS has made mistakes but their products are the backbone of business today and frankly a reasonably priced, productive solution will sell better to business than Apple. Apple clearly has the lead (today) in consumer devices, not a surprise since their marketing is better and consumers are quick to buy anything that sparkles and has hype. Fads come and go. Apple's arrogance and hypocrisy are permanent. Just my 2₵

Thu, Aug 2, 2012 Bob Phoenix

Make no mistake, I love my iPhone and iPad. But, imagine a world where our Windows phone, Windows tablet, Windows ultrabook, Windows desktop, and Office 365 work seamlessly! Now I can get some work done no matter where I am. Good riddance to iTunes, iCloud and all the other iCrap that trashes my PC and the time it takes to keep it current. Like it or not, if you want to communicate with business partners, it's still a windows World. I'm all in and suspect I'm not by myself. Oh, and my business is going to whup yor business because I'll be working instead of looking for an iOS app to halfway solve an Apple shortcoming.

Thu, Aug 2, 2012

Despite fanboy comments to the contrary, Canalys is largely correct in their assessment that Redmond has entirely lost its way, having sacrificed its credibility within the developer and enterprise communities on the altar of a shockingly misguided consumer play destined to be a massive epic fail, one that will be studied in business schools for years to come.

Wed, Aug 1, 2012 Al

I'm going to purchase a Surface 8 Pro or similar tablet from a partner when they are available (January 2013?). The reason? It's the only game in town if you want a tablet that is instantly a full computer supporting all software that is supported by Windows 8 Professional. From the keynote, the Surface 8 Pro is beautifully designed. The price provided at the keynote is similar to a comparable ultrabook, which is what it doubles as. Microsoft said the Windows 8 RT tablet will be priced similarly as comparable tablets. As a consumer, I'd love to see prices as low as possible. However, I don't think MS will have to resort to price slashing to interest buyers. The only thing I see them possibly having trouble with is differentiating RT from Professional, although it shouldn't be hard to distinguish RT from iOS or Android devices.

Wed, Aug 1, 2012 Dustin

Canalys is a joke. While they may be correct about some stretegic partners feeling alienated, they've gone far beyond "analysis". They're putting more emphasis on chamioning one product and degrading another than just being analysts.

Wed, Aug 1, 2012 MylesJ

Intel just announced 40 different Ultrabooks shipping this fall. Sitting on the sidelines is not a good recommendation to OEMs that like to get paid. Wanting Win8 plus Office starter to cost less than Win7??? What information are they using to say the price will be too high? I know a lot of sight unseen Surface Pro buyers.

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