Will the Microsoft Surface Tablet Go the Way of the BlackBerry PlayBook?
Microsoft is in trouble. Despite its aggressive marketing campaign, sales of its new Surface RT tablet — which the company boasted would combine the best elements of a laptop and a tablet — are well below expectations. According to estimates from Boston-based brokerage firm Detwiler Fenton, Microsoft is on track to sell between 500,000 to 600,000 Surface RT tablets in the December quarter — far below its expected sales of 2 to 3 million.
However, Microsoft's troubles could spell good news for consumers, as high inventory of an ailing Surface RT could spark a flurry of deals. But why is Microsoft's much-hyped Surface RT tablet struggling in the first place?
For starters, Microsoft has been very controlling about how its Surface RT tablets are sold. At the moment, they can only be bought directly from the Microsoft Store online, at pop-up boutiques, or at Microsoft retail stores. Lukewarm media reviews have also chilled shoppers' wallets, as they turn to other tablet manufacturers (with well-established app stores) for their needs.
But most importantly, in the weeks since its debut, we've yet to see a deal on a Surface RT tablet. And at a time when $199 mainstream tablets are becoming the norm, the Surface RT's high $499 price tag is undoubtedly hurting it. Especially since we've seen discounts on every other tablet currently on the market, including the latest batch of Apple iPads.
Surface RT Price Could Drop 38% Within 2 Months
So when can we expect to see deals on Surface RT tablets? To find out, we turned to the Blackberry Playbook. Now, we are in no way implying Microsoft is in the same boat as RIM, but its Surface RT Tablet could wind up walking down the same plank as the Playbook.Like the Blackberry Playbook, the Surface RT tablet has debuted to mediocre reviews. However, whereas the entry level Playbook dropped 6% in price six weeks after its debut, Microsoft is showing no signs of discounting its tablet in the near future. In fact, during the biggest shopping days of the year, Black Friday and Cyber Monday, Microsoft discounted everything but the Surface RT. (By comparison, Apple, Barnes & Noble, Best Buy, and Amazon slashed prices on pretty much every tablet on the market.)
While a potential 6% price drop may sound like a good deal for some, true bargain hunters may want to hold off a little longer, as just five months after the Playbook's debut, the 16GB Playbook dropped 38% in price. Even the higher 32GB model dropped an impressive 33% in price during the same timeframe. And the deals only got better from that point forward. In fact, in an effort to move inventory, some retailers, like Office Depot, began discounting the Playbook and bundling it with $100 gift cards. Again, this was just five months into the tablet's lifespan, which means we could see hefty discounts on the Surface RT as early as March 2013.
And while it's anyone's guess just how low the Surface RT tablet can fall, keep in mind that last month we listed the 16GB Playbook for an all-time low of $130. That's a whopping 74% off its initial list price. (Granted, it took 19 months to reach this low.)
What's Next for Surface?
Microsoft has confirmed it will debut its Intel-powered Surface Pro tablet some time in January for a starting price of $899. Price-wise, that puts it higher than every mainstream tablet available today, higher than many of today's ultrabooks, and considerably higher than many of the Windows 8-powered laptops we've seen these past few weeks.However, the Surface Pro tablet is a different beast altogether. Unlike the ARM-powered Surface RT, the Surface Pro will pack more traditional hardware and it'll be capable of running existing Windows programs in addition to new ones designed for Windows 8. (Due to its architecture, the Surface RT can only run Windows 8 apps and not legacy programs.)
With two tablets on the market, Microsoft would be wise to discount its entry-level Surface RT tablet, so at the very least we recommend holding off till the Pro's debut before making any purchasing decisions. If you still can't wait till March for the first deals, then shoppers should wait until the Surface RT has better distribution. In other words, wait until you can walk into a Best Buy and see it in person, as third party retailers are more likely to discount the tablet (or bundle it with a gift card) than Microsoft.
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A touchscreen interface and a tablet form-factor will only make a minor difference to consumers who care about this aspect of their purchase.
And for the vast majority of other consumers, they are more interested in what is already selling well, used by their friends, and readily available: in other words, iPads and Android tablets.
There are a bunch of analysts all of whom seem to have different estimates of Surface sales. I've seen 1.5-2 million from one other analyst and 1-1.5 million from another. The fact is no one knows how many surfaces have sold except MS. You have just picked the lowest estimate and published it as fact.
As to the discounting of the Surface, I have seen no evidence that MS will discount the Surface similarly to the Playbook. I can say here in this comment "The Surface RT could drop 2% within the next 2 months" and it has just as much validity and accuracy as your 38% pronoucement, as would the headline "MS will give away the Surface RT within 2 months"- after all Google gave away the Nexus Q because it was a flop.
If you're going to engage in rampant speculation, at least make it clear that's what you're doing.
A small portion of users really need the M$ Office on their tablet (even though it is not completely compatible with older M$ documents). May be they even think it is a good idea to work with documents (not just to edit them slightly) on a tablet.
Windows 8 tablets might appear more lucky, but don't expect them to be reasonably priced.
BOTTOM LINE: Don't see any reason to buy a Windows RT tablet, unless you're an M$ fanboy or need the M$ Office.
If you're looking for a fire sale, look to one of the other companies making RT tablets who may decide to bow out of RT hardware and just skip straight to 8 Pro based tablets.
It is the first multi-user, touch + mouse/keyboard friendly OS that has robust file system access including network shares (SMB) and desktop grade utilities like file explorer, task manager, disk manager, power shell. Not to forget it also is the only tablet that can identify 450,000,000 devices through its full USB port and WiFi. Then add to it Microsoft Office. Surface is much more than a regular tablet and is rightly priced.
It is less than 2 months of its release, and predicting failure and comparison to Playbook is just plain stupid. Playbook does not have the ecosystem Windows has. The Windows 8 desktop OS sold 40 million copies in 1 month, and the momentum will help Surface in coming year.
For another thing, the Surface wasn't designed to sell in tremendous numbers. Microsoft wants to sell them (they aren't just reference designs. They're flagship designs.) but they aren't expecting to sell a hundred million of them. I wouldn't expect huge price cutting to get rid of inventory, at least not in the short term. They could drop the price when new Surface models come out, but not price dropping in the same vein as the Playbook or for the same reasons.
Finally, this is all based upon unfounded numbers. We'll see what the real reports say.
I'll leave you with Ed Bott's comments on this post: https://twitter.com/...t/status/278543863591866368
You should point users to W8 Atom tablets, their prices are also dropping and they can run real windows.