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Microsoft's Long Game on Surface Gets Longer

Microsoft always plays long games, and the Microsoft Surface is no exception. But a recent analyst's credible downgrade of Microsoft Surface RT sales for the fourth quarter suggests the long game is getting even longer.

I argued recently that with the pricing of the original Microsoft Surface, Microsoft wasn't aiming for a blockbuster success. Instead it just probably wanted to stay in the consumer conversation and keep a place in line for the Microsoft Surface Pro, which is Microsoft's best chance for beating Apple back from the enterprise. (The full column, along with a lively thread, in which readers alternately make good points and/or tell me I'm completely wrong, is available here.)

The analyst is Brent Thill at UBS AG and he cut his estimate from 2 million units to 1 million units for the quarter ending in December. Yes, Microsoft CEO Steve Ballmer has said Microsoft expected to sell a "few million" Surfaces in its first year. But selling 1 million in the quarter when it launched, during the holiday season, in conjunction with a huge ad campaign? I find it hard to believe that kind of number was even on the low end of anybody's "slow but steady" sales projection PowerPoint slide in Redmond.

Because the numbers appear to be disappointing, don't expect any word at all from Microsoft. When a product performs poorly, Microsoft has a big enough balance sheet to bury it and hide the details from investors. Next week's earnings call is almost sure to be devoid of numbers for Surface sales.

Nonetheless, Microsoft is used to disappointingly slow starts for its long games lately. Look at Bing vs. Google or Windows Phone vs. iPhone/Android. If those two are any guide, expect Microsoft to do what it's been doing -- keep diligently plugging away. The company took the time (probably too much) to set a coherent mobile strategy behind the current product mix, and it has little choice now but to press on.

Next up, the Surface Pro. Panos Panay, the general manager for Microsoft Surface, Tweeted this week, "On my way to the factory to check out #Surface Pro coming off the line...arriving in the coming weeks." In his report, meanwhile, Thill wrote, "Surface Pro is the more promising" model.

Be that as it may, given Microsoft's recent track record, expect a slow start for Surface Pro.

Posted by Scott Bekker on January 16, 2013 at 11:58 AM

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Reader Comments

Thu, Jan 17, 2013 Josh IL

I'm not sure why everyone is so eager to wait for the Surface Pro. Why not pick up something that is lighter and thinner that runs the full Windows 8 Pro now? The difference between 1.5 pounds and 2 pounds is huge in a tablet. The Lenovo ThinkPad Tablet 2 and the HP Elite Pad are both available now and can run legacy applications. They use the new Atom processors which have been more than adequate for anything I have run on my Lenovo. They also run much cooler than a traditional i5 processor.

Thu, Jan 17, 2013 80's Rocker

Deric, sorry the last post should have been directed to Roger Jennings not you.

Thu, Jan 17, 2013 80's Rocker

Deric, If that is all you do on the Surface RT and don't need to run legacy application, connect to domain, etc, then you do not need a Surface Pro and a Surface RT is the tablet for you. The only reason to get a Surface Pro is to run legacy applications, you need to connect to a domain, and/or you must have a digitized pen.

Thu, Jan 17, 2013 80;s Rocker

So if Steve Ballmer said "Microsoft expected to sell a "few million" Surfaces in its first year", then why does everyone think that 1 million the first quarter would be dissappointing. That puts selling a "few million the first year within reach, since 2 is considered a few. I think those estimates are too low. I talked to the manager at the Oak Park mail and she stated they had just sold their 75,000 Surface (and that was just their store), and that was 3-4 weeks before Chrismas. In addition, Overland Park / Kansas City is probably not considered one of the bigger markets for the Surface.

Wed, Jan 16, 2013 Galvo Mich

I have a surface and love it. What people don't understand is Mobile Broadband. We drove to Florida and it only went out twice, At the Michigan Ohio border and the Smokey Mountains. I confess I like the Windows Phone better than the Iphone and Gphones too . We also have a Driod Trasformer Quad that is a joke compared to the surface. Let me explain another thing. On the trip i changed our tee off times at Myrtle Beach. My CIO friends were going nuts thinking that it would screw up the entire Excell spreadsheet, and we would be to blame. There were no incidents, the changes from the Windows Phone and Surface were fine. If you look what you can actually do with the darn things I will take the Surface over the I pad and Driod every time. You get what you pay for. I am not interested in the Pro, Rt has plenty of power to run Office and thats all I need. (However my son liked playing Xbox live while we were driving to Florida,The screen in the back of my new Town and Country drops down when it connects to the car with Bluetooth. But you got to get the controllers from the dealer.) I cant believe there are so many people that just dont have a clue about it.

Wed, Jan 16, 2013 Al

If Microsoft can somehow get the price of a Pro to $699, they would have a winner. I think many people would like a device that can behave like a true tablet yet can also be used for real work. The Pro is the only game in town with this combination. Overpriced products is a page from Apple's books should need not be followed. Don't shoot yourself in the foot Microsoft. Price accordingly and don't be afraid of the #1 tablet spot!

Wed, Jan 16, 2013 Scott Bekker RCP

Deric, I'll be interested to know how you like it when you do get your Surface Pro. Let me know at sbekker@rcpmag.com. Roger, I hear you. You'd definitely need to be getting some serious business use out of the Surface Pro for it to be worth the higher price tag.

Wed, Jan 16, 2013 Roger Jennings Oakland, CA, USA

I purchased a Surface RT for my wife as a substitute for a laptop during our business travels together. She uses it primarily for entertainment with time-shifted MPEG-4/H.264 TV content from a Flash drive, thecking mail, and working with the Office apps. I doubt if I'd be willing to pay $899 for a Surface Pro for similar uses.

Wed, Jan 16, 2013 Deric South Africa

I for one am really looking forward to the Surface Pro. We have been demo'ing the RT version to clients, so they can get a feel and an idea for the Pro, and we have many clients interested in the unit. The first one we get will be mine though!

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