UBS: Microsoft sold 1 million Surfaces last quarter

Microsoft released the Surface with Windows RT in late October and now that the holiday shopping season is over, many are wondering how many devices Microsoft has sold

If you are willing to believe an analyst at UBS, Brent Thrill is stating that Microsoft has sold only 1 million Surfaces last quarter which is a revised figure and is down from 2 million. Despite the weak sales, Thrill is optimistic about the Surface as a product line.

Even though one million may be a small number, building brand recognition is as important to Microsoft as it is as landing sales. If they can make the Surface a household name, sales will eventually follow.

Microsoft has been aggressively marketing the Surface with Windows RT and we will be curious to see how they advertise the Surface Pro without creating consumer confusion.

Microsoft’s next iteration of the Surface will launch later this month and will feature Windows 8 and an Intel processor. This version of the Surface will be more powerful (and more expensive) than the Surface with Windows RT but many expect it to sell better as its target market is much wider than the Surface RT.

While we are optimistic that Microsoft will release Surface sales figures they may remain quiet on the numbers much like they have done with sales of Windows Phone 7 and 8. 

Source: SAI

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oh wow. that's fantastic. keep it up for another 84 QUARTERS (or 21 years) and you'll catch up with ipad. lmfao.

Torolol said
Blame probably due to the blundering 'over-expensive-pricing' strategy.
MS failed to find the optimum revenue from proven theory "price vs demands".
Didn't entushiast of surface devices become quiet-er after MS announce the price ?
I don't think the pricing was the problem. I think it's because they didn't distribute it enough and at first they only sold it at Microsoft stores which I've yet to actually see in Canada. If advertised it right, but they didn't distribute it nearly as good as they could of done.

Remove start menu, add stupid squares and there you have it, less than a million in a quarter Next time they will learn!

DaveBG said
Remove start menu, add stupid squares and there you have it, less than a million in a quarter Next time they will learn!
Having a start menu on a tablet would be the worst thing they could do.

why is everybody bickering over price? have a look at the specs, and see the price is perfectly fine.
especially compared to an ipad or surface rt.....

no way in the world are they going to move another million pro units with that price im am sorry but it does not look good at all for the future of surface

i wonder how many ipads sold in the last quarter

TurboShrimp said
i wonder how many ipads sold in the last quarter
I wish I could say the same for the iPhone's, but Apple cut the demand in half because of lesser sales..

As stated earlier, it seems that teenagers are defining the Surface marketplace; i.e., comparing it with an iPad. When is Microsoft going to do something significant for the remainder of the marketplace?

Waiting for Tegra 4 Surface... That Tegra 3 CPU has been around for much too long now.

Been playing with a RT tablet with Tegra, while nice, it could be faster. It does not help that all RT apps take time to load.

RT apps loading times wont really reduce much with a faster chipset
Many apps preload data or take long with loading because they require data from the cloud.
And to prevent false data or incomplete data to be shown, the app wont show untill its fully loaded.

thats my only beef with Windows 8. I'm using it on a desktop but the apps load like its on a phone/tablet. Hope they fix this slow loading app issue.

rom said,
thats my only beef with Windows 8. I'm using it on a desktop but the apps load like its on a phone/tablet. Hope they fix this slow loading app issue.
I've never had an issue with the loading times of my apps. What's the specs on your PC. I run Windows 8 on my HP G62 laptop and things seem to be fine.

I'm going to be honest. I was going to buy one, but after playing with a Surface, and a few others that are on the market, the others just feel and look nicer.

A fancy keyboard isn't enough to make me buy the chunky thing.

1 million is terrible, awful. There is no buzz about windows 8 or Surface. Thats interesting considering all the advertising.

1M in 2 months is pretty good considering it was only available via MS for most of that time.
And don't forget it's only available in a couple of countries all over the world

derekaw said
1 million is terrible, awful. There is no buzz about windows 8 or Surface. Thats interesting considering all the advertising.
There actually was a lot of buzz about Windows 8, but they distributed it very poorly, resulting in significantly lower sales.

If they want to sell more, they need to fix the abysmal default apps. When you are forced to resort to alternative media players because the default one is so bad then maybe its probably best they didnt sell more.

efjay said,
......

?

You using those container/codec formats that only copyright violators use?
I've had 0 problem on my Surface, with my extensive media collection (7.2TB of video).

Yea its mostly people using the MKV files that are almost only seen in piracy.
Also its nothing more then a new .avi format. Its just a container people! And the reason MS does not support containers, because ITS IMPOSSIBLE due to it constantly changing and supporting far to much codecs.

Seriously people, .MKV is exactly the same as an .AVI, stop praising it into the sky.
And for me MKV has always been one of the worst performing containers i've ever encountered.

efjay said
If they want to sell more, they need to fix the abysmal default apps. When you are forced to resort to alternative media players because the default one is so bad then maybe its probably best they didnt sell more.
I don't think the apps would make that much of a difference. iOS 6 is still doing considerably well even though it comes with a half-baked map service.

I think MS needs to really pay attention to distribution and getting the devices in every store AS possible.

I'm still shocked there is no official Facebook and Twitter apps. That's what average consumer cares for now, and people might buy more Surfaces if these kind of must-have apps became available.

volodoscope said,
I'm still shocked there is no official Facebook and Twitter apps. That's what average consumer cares for now, and people might buy more Surfaces if these kind of must-have apps became available.
Twitter is said to be working on one right now, but Facebook is being stubborn and not coding for Windows 8 yet.

IMO Microsoft was foolish to lead off with the RT instead of the Pro. Now thanks to the delay they will have much more competition coming to market including the Sony VAIO DUO 11. For what it's worth I will still be getting the pro.

IMO Microsoft was foolish to lead off with the RT instead of the Pro. Now thanks to the delay they will have much more competition coming to market including the Sony VAIO DUO 11.

Which runs Windows 8. If someone buys a Surface or a Sony Duo 11, Microsoft doesn't care; they're still getting paid.

vmspionage said
Now thanks to the delay they will have much more competition coming to market including the Sony VAIO DUO 11. For what it's worth I will still be getting the pro.
That's good though, there's more choice of tablets and the more that are running Windows RT or 8, the better.

@ $499 ea...and this guy claiming ony 1M sold...that $500M bucks for a device only avail for 2 months, online from Microsoft Stores only and most only released in the USA. Seems like a good number. I'd like to see this guy selll 1M of anything even for a penny and see what happens.

Actual availability is perhaps an issue at the moment. Where I live in Canada I've yet to see one in a store. Nor is there any Microsoft Store in my city. Apple on the other hand has their kit in their own retail locations along with places like Staples and Best Buy. I've yet to see a surface in a store so even if I wanted to buy one it would be more challenging.

technikal said,
Actual availability is perhaps an issue at the moment. Where I live in Canada I've yet to see one in a store. Nor is there any Microsoft Store in my city. Apple on the other hand has their kit in their own retail locations along with places like Staples and Best Buy. I've yet to see a surface in a store so even if I wanted to buy one it would be more challenging.
I live in Canada too In Winnipeg, I have NOT seen any Surface yet.

DBrandUSA said,
I'd say $500,000,000 (minimum) in sales thus far is pretty darn good for a new OS/Tablet.

Less expensive, manufacturing, patents, salaries, distribution channel and specially marketing. Most OEM earns 10% per machine.

I don't think MS wants it to sell that much, hoping oems will release some better designs. 1 million is a terrific feat considering price and how difficult MS made it to actually purchase a surface. It felt as though I was adopting a child when I purchased my unit.

mrdeezus said,
I don't think MS wants it to sell that much, hoping oems will release some better designs.

I really think this whole "setting the bar" for OEMs is just PR rhetoric. Microsoft probably has no issue becoming a devices company. they just want to keep OEMs happy for long enough until Microsoft making devices as well becomes the status quo.

Adam Reyher said,

I really think this whole "setting the bar" for OEMs is just PR rhetoric. Microsoft probably has no issue becoming a devices company. they just want to keep OEMs happy for long enough until Microsoft making devices as well becomes the status quo.

Or -- they wanted to give OEMs one last chance to step up to the plate, so that when Microsoft really ramps up the sales, nobody can complain that Microsoft stabbed them in the back. (Acer, of course, is already complaining, but nobody's listening.)

1 million surface tablets is about %3 marketshare of tablets. Count all the other windows tablets(RT and 8) and you've got yourself a nice chunk of the tablet market in your very first quarter. Once the software library matures, its game over.

I never understood the fascination with Surface sales numbers. From the outset, Microsoft said they expected to sell "a few million" in the next year: http://www.forbes.com/sites/er...n-surface-pcs-in-next-year/

They then put the surface on sale with very limited distribution in only a few countries. At face value, this was an effort to avoid stepping on OEM shoes, who wold be selling in more countries and retail locations.

Yet the blogosphere and analysts have been so concerned with Surface sales, constantly trying to estimate the number sold, when it is a completely meaningless number. The more meaningful number is how many Windows RT tablets are being sold altogether.

So I have to wonder, how is 1 million surface sales "weak" when not only is distribution still very limited, but sales are being cannibalized by Dell, Acer, Asus etc. (which is not necessarily a bad thing for Microsoft). Microsoft themselves said they would be happy to sell a few million in the next year. Selling 1 million in 2 months seems like they're performing better than they expected.

More important than the number of units sold is the fact that Microsoft gained lots of recognition. I have a Surface RT and it surprises me how many non-tech people recognize the Surface from a distance, nobody confuses it with an iPad and everybody is interested and thinks is a really cool device. It brought the cool factor to Microsoft, which is huge, considering how bad their image was. The only issue that is still pending is cost; people need to see the Surface RT at the same level as an iPad, and that will come with more apps.
With Surface Pro, I think it will be a no brainer, since the Pro can fully replace your laptop and your tablet and you can run any Windows application you want. The Pro will continue to promote development of great touch based apps, which could also be made available for ARM (RT), so it will work in the benefit of Surface RT and at the end of the day the RT will have plenty of apps and along with competition the prices will go down and then Android and Apple will have trouble to be an attractive tablet product.

Applications make or kill a platform, and people will continue using Intel, and with Windows 8 developers will make touch based apps that could be compiled to ARM. In addition, the battle is not yet over on the low power, long battery life processor: Intel is closing in to ARM in this area, and if they succeed and if they are aggressive in price, most tablets could be Intel based, with same battery life, at the price of an ARM tablet and then it will be a no brainer what to buy, and all this will benefit the king of the Intel based market, which is Microsoft.

It's quite a good number when you compare it to the first quarter figures for the Xbox 360 (1.5m). I think 2013 will be a good year for the surface. I expect the Surface Pro to sell well and the Surface RT will sell more as it gains a reputation and comes down in price.

Gaffney said,
It's quite a good number when you compare it to the first quarter figures for the Xbox 360 (1.5m). I think 2013 will be a good year for the surface. I expect the Surface Pro to sell well and the Surface RT will sell more as it gains a reputation and comes down in price.
Surface RT doesnt have to come down in price and likely wont. Comparing it to similar options the price is competitive. There is no reason for a price drop. Compared to an iPad that is also $499, you get more with the Surface hardware-wise.

While I agree for the most part I also expect a price cut will happen sometime in the second half of the year to clear stock as they make way for the surface Rt 2.

I also still have a felling we'll see a smaller 7 or 8 inch surface to come and take on the nexus and kindle fire hd.

To put it in perspective, 1 million is an excellent start. Remember, the most successful Android tablet, Nexus 7, selling at a bargain price of $199 only did about 1.5 million units in its first quarter, which is pretty much the same as Surface (being on sale ~2 months in Q4), a brand new platform selling at thrice the price. This is not a disappointment at all - no $500 Android has started off so well. I am willing to bet Nexus 10 is nowhere near 1 million for Nov and Dec and Nexus 7 is around 2 million at best. Yes, we all know iPad will sell over 10 million, but that's an established de-facto standard now.

It will take a lot to get people that are none techy to choose the surface and not iPad, simply because iPad is a known entity and all their mates have one and its already cool and what have you. This will be a long and slow process but I feel MS knows this and is in it for the long haul, this isn't Zune mk2 - they went international from day one with massive advertising and all the infrastructure is now in place (store, xbox music etc.).

Its almost like Zune was a test of how to push out hardware linked to services, a test that was US only and it helped them define a strategy to use once ready with the new Windows 8 kernel and infrastructure.

Great post - this is exactly how it is.

I personally think 1 million Surfaces in a quarter is a mentally big number. There are no MS Stores overseas - just on-line for select countries. Nobody is used to ordering hardware direct from MS - they expect to pick it up in store.

That said - I think $100 cheaper would have made a massive market statement. Price parity with an established (and much loved) device like ipad is a tough match-up. $100 cheaper for all the extra value you get with it would have really pushed the market.

Maybe Microsoft was too soft on its OEM partners - Samsung backed out of an RT device afterall. Let's see if NOKIA come in with one, if not then I think MS should price cut and then up-charge on the v2.

I can vouch for that. When I heard about the Surface I was so excited. The only thing stopping me from buying it is the price. I am not saying it's badly priced (because it's not); it's just that it costs too much for someone earning just above minimum wage.

drazgoosh said,
I can vouch for that. When I heard about the Surface I was so excited. The only thing stopping me from buying it is the price. I am not saying it's badly priced (because it's not); it's just that it costs too much for someone earning just above minimum wage.

Quoted for truth! That's the biggest show-stopper for the device is the price. They're used to seeing Apple's products placed higher, so they come to Microsoft only to get similar pricing.

The bad part is that you can still get an iPad 2 for $399, or iPad mini for $329 ($429 for the 32GB). Thus, Apple is still doing well to provide parents and all customers alike with options at least. Which tablet is best is debatable, especially with the Android options/price points from Samsung, Asus, etc. Microsoft just isn't there yet for me, in terms of price. If I needed Office on the go that badly, I have cheaper full blown laptop options anyway. Hell, Best Buy has an i5 Asus laptop out for $450. I just don't see the part where the Surface makes sense to me yet...

dead.cell said,
If I needed Office on the go that badly, I have cheaper full blown laptop options anyway. Hell, Best Buy has an i5 Asus laptop out for $450. I just don't see the part where the Surface makes sense to me yet...

Except you're still spending a minimum of $99 for Office which pushes the price over the surface price. Full blown laptops usually come loaded with a trial office which can be converted, or sold with a home/student 'bundle' for $99 more.
You get the same version baked into ANY WindowsRT device.
So if you want to compare on price, deduct $99 from the MSRP for any WindowsRT device for comparison sake.

deadonthefloor said,

Except you're still spending a minimum of $99 for Office which pushes the price over the surface price. Full blown laptops usually come loaded with a trial office which can be converted, or sold with a home/student 'bundle' for $99 more.
You get the same version baked into ANY WindowsRT device.
So if you want to compare on price, deduct $99 from the MSRP for any WindowsRT device for comparison sake.

Teen aren't buying a Surface for Office...

Additionally, Office can be very cheap for most users. Either via free or heavily discounted for being a student or heavily discounted from work due to MS' $10 for Office if licensed at work program...

http://www.microsofthup.com/

deadonthefloor said,

Except you're still spending a minimum of $99 for Office which pushes the price over the surface price. Full blown laptops usually come loaded with a trial office which can be converted, or sold with a home/student 'bundle' for $99 more.
You get the same version baked into ANY WindowsRT device.
So if you want to compare on price, deduct $99 from the MSRP for any WindowsRT device for comparison sake.

As a student, I can get Office discounted, as LogicalApex mentioned. I could also go with a cheaper laptop. Once again, my point being that it wouldn't be Windows RT, but still full blown Windows. And even then, going by technical specs, the Surface is completely blown out of the water.

Lastly, at 32GB of storage, how much of that is usable after the OS? Those are big things to think about.

My point still stands that for a college student, it just doesn't work too well where budgets are concerned. I realize they're aiming more to compare with the Apple premium, but again, Apple still provides options. That's where many customers are torn with Microsoft.

(I work retail, if that helps)

You have to consider that a lot of people are holding out for the Pro model too, so I expect that number to jump after the end of this month.

Jimmy422 said,
You have to consider that a lot of people are holding out for the Pro model too, so I expect that number to jump after the end of this month.

Shall have to see. Amount sold will jump, but with the Pro being more expensive....curious by how much.

techbeck said,

Shall have to see. Amount sold will jump, but with the Pro being more expensive....curious by how much.

Its going to cost as much as any other PC running Windows 8. Prices are expected to start at $899 and up depending on configuration of course.

I believe Microsoft already stated the 64GB version of Surface Pro would be $899 with the 128GB version for $999. This is actually cheaper than models that will be selling from other OEM's

I'm waiting to pre-order two 128 models for my wife and myself. I wish they would go ahead and open Surface Pro for pre-order.

TechieXP said,
Its going to cost as much as any other PC running Windows 8. Prices are expected to start at $899 and up depending on configuration of course.

techbeck meant he was curious by how much sales will jump, not the price. We know exactly how much Surface Pro will cost.

Just to put the numbers in context --

Assume all Surfaces sold are the base 32 GB model, with a touch cover. If 1 million devices were sold, at $600 each = $600 million in revenue. If Microsoft is making $150 (*) per Surface/cover combo after all the costs are subtracted, then it's earning $150 million on the Surface RT.

For comparison, the E&D division (mostly Xbox)had $528 million in operating income in the year-ago quarter. It's still tiny compared to Windows -- $2.9 billion in operating income in the year-ago quarter -- but the Surface Pro isn't even out yet!

Surface RT accomplished this in a tough economy, as a consumer tablet, competing both against iPad and against cheaper Android/Kindle tablets. The Surface Pro can run Win32 desktop applications, it's targeted at the business sector (much less cyclical than consumer sales), and it can replace *both* a tablet and a laptop. Oh, and it costs more, and should generate more profits.

--

(*) iSuppli has a $284 BOM + manufacturing cost for the Surface RT, without the touch cover. $150 of operating income is a pretty conservative estimate after subtracting out other costs.