Microsoft sold 900K Surface RT tablets in face of muted demand

Computerworld - Microsoft shipped an estimated 900,000 Surface RT tablets last quarter, barely missing the top five device makers, but illustrating that demand was "muted at best," IDC said today.

"There is no question that Microsoft is in this tablet race to compete for the long haul," said Ryan Reith, analyst and program manager of IDC's mobile device tracking, in a statement. "However, devices based upon its new Windows 8 and Windows RT operating systems failed to gain much ground during their launch quarter, and reaction to the company's Surface with Windows RT tablet was muted at best."

Microsoft has not disclosed sales numbers for the Surface RT, and has generally shied away from even general statements of its progress.

IDC's Surface RT estimate was based on the firm's ongoing tracking of Asian component suppliers, said Tom Mainelli, IDC's research director for tablets, in an interview today. Its number was in the same ballpark as earlier estimates that had pegged Surface RT sales at around 1 million.

Microsoft launched the Surface RT in October, and until late in the quarter sold it exclusively through its online mart and its several-dozen retail stores. Only in December did the company expand distribution to other retailers, such as Best Buy and Staples in the U.S.

"Microsoft faces an uphill battle," said Mainelli. "They were damned if they did [their own tablet], damned if they didn't."

Mainelli laid part of the blame for the Surface RT's performance on the upcoming Surface Pro, which unlike its predecessor runs the full Windows 8 operating system and existing Windows desktop applications.

"There was a fair amount of confusion about what [Surface] RT is, and also a fair amount of interest in the Pro version," Mainelli said. The combination led some potential buyers to delay a decision until they had a chance to see and evaluate the more expensive Surface Pro.

Both Mainelli and Reith also pointed to the Surface RT's price point as a flaw in Microsoft's launch-quarter strategy. The Surface RT starts at $599 with a keyboard, the accessory Microsoft has aggressively promoted as key to the tablet's usefulness.

"Microsoft and its partners need to quickly adjust to the market realities of smaller screens and lower prices," said Reith. "In the long run, consumers may grow to believe that high-end computing tablets with desktop operating systems are worth a higher premium than other tablets, but until then [average selling prices] on Windows 8 and Windows RT devices need to come down to drive higher volumes."

The one bright point in the quarter for Microsoft, said Mainelli, was that it was close to making the top five list, outsold by fifth-place Barnes & Noble by only 100,000 units.