Microsoft (MSFT) Surface Sales Still Missing Expectations as Consumers Lack Interest
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Price: $409.06 +0.37%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 0.7%
Revenue Growth %: +15.0%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 0.7%
Revenue Growth %: +15.0%
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Microsoft (Nasdaq: MSFT) Surface sales are coming in a little lighter than expectations...
Okay, they're completely missing expectations. Can the public really be blamed, though?
According to Bloomberg, sales for Microsoft's Surface tablet are at about 1.5 million units through the middle of March. That compares with order for 3 million Surface RT units and internal expectations calling for 2 million units to be sold in the December quarter alone.
Microsoft's first foray into the PC market seemed to have been doomed from the start. While Apple's (Nasdaq: AAPL) iPad had first-mover advantage, other competitors attempted to take away market share more on pricing, while sacrificing some features. With Microsoft, the company priced a brand new tablet high, while simultaneously attempting to launch its latest operating system, which received mixed reviews at best.
Where Microsoft may have fumbled is in marketing the device. Though Microsoft attempted to make the Surface RT tablet, which is the lower-end version versus the Surface Pro, appear to be simply a tablet, many said it was more like a PC after using the device. Apple's iPad, by comparison, fits the tablet mold nicely, with key features and quick speed, while not trying to take away from Apple's iMac and MacBook lines.
Stakes are high for Microsoft moving forward; BMO Capital sees PC sales slipping 18 percent in the first quarter, versus a traditional slide of 9 percent in the period following holiday sales. With Microsoft largely relying on PCs to run its Windows operating system at this point, a successful diversification into tablets and smartphones is a must if the company plans to sustain sales and/or keep growing in the foreseeable future.
With prices starting at $499 and moving higher from there, Microsoft's challenge now lies in drawing in consumers from such competitors as Amazon.com (Nasdaq: AMZN) and Google (Nasdaq: GOOG), both of which have tablets priced in the $200 to $300 range. If the public can't discern a difference between a Kindle Fire and Surface RT, why would they shell out more dough? (You're on watch, Microsoft's marketing department.)
Shares are indicated for a higher open Friday.
Okay, they're completely missing expectations. Can the public really be blamed, though?
According to Bloomberg, sales for Microsoft's Surface tablet are at about 1.5 million units through the middle of March. That compares with order for 3 million Surface RT units and internal expectations calling for 2 million units to be sold in the December quarter alone.
Microsoft's first foray into the PC market seemed to have been doomed from the start. While Apple's (Nasdaq: AAPL) iPad had first-mover advantage, other competitors attempted to take away market share more on pricing, while sacrificing some features. With Microsoft, the company priced a brand new tablet high, while simultaneously attempting to launch its latest operating system, which received mixed reviews at best.
Where Microsoft may have fumbled is in marketing the device. Though Microsoft attempted to make the Surface RT tablet, which is the lower-end version versus the Surface Pro, appear to be simply a tablet, many said it was more like a PC after using the device. Apple's iPad, by comparison, fits the tablet mold nicely, with key features and quick speed, while not trying to take away from Apple's iMac and MacBook lines.
Stakes are high for Microsoft moving forward; BMO Capital sees PC sales slipping 18 percent in the first quarter, versus a traditional slide of 9 percent in the period following holiday sales. With Microsoft largely relying on PCs to run its Windows operating system at this point, a successful diversification into tablets and smartphones is a must if the company plans to sustain sales and/or keep growing in the foreseeable future.
With prices starting at $499 and moving higher from there, Microsoft's challenge now lies in drawing in consumers from such competitors as Amazon.com (Nasdaq: AMZN) and Google (Nasdaq: GOOG), both of which have tablets priced in the $200 to $300 range. If the public can't discern a difference between a Kindle Fire and Surface RT, why would they shell out more dough? (You're on watch, Microsoft's marketing department.)
Shares are indicated for a higher open Friday.
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