Microsoft Sold Less than 900,000 Surface Tablets Last Qtr

While Apple sold 22.9 million iPads in the Christmas quarter, Microsoft shipped only about 900,000. After returns, the sell-through might have been as little as 680,000 according to NPD and IHS. In contrast, in the first quarter of iPad sales in 2010, deeper in the recession, Apple sold 3.27 million.

Recent reports from IHS iSuppli and NPD have painted a disappointing picture for Microsoft's Surface RT sales.

One of the major problems was the lack of customer familiarity with Windows 8. It seems they were expecting an easy-to-use tablet and ended up with a business-class notebook and a new, complex OS that wasn't very intuitive.

There were some other factors that led to problems with the Surface RT, causing slow sales and many returns.

1. It wasn't widely available; distribution was focused on Microsoft's flagship retail stores where sales people could steer customers into buying a profitable (for Microsoft) keyboard.
2. The Surface RT, with an ARM processor, does not run regular x86 binaries, everyday Windows apps. Customers may have been confused by that because of the hyped co-release with Windows 8.
3. The advertising focuses so intensely on the keyboard that customers, in the market for a tablet, perhaps perceived the Surface as, in fact, a notebook computer.
4. The Surface RT, designed to appeal to business professionals, doesn't have that futuristic look for the consumer who is desperate to leave the difficulties of a PC behind.
5. Microsoft was late to a market that the leaders had figured out. Apple took the lead with consumers, but also locked up the educational and enterprise use (hotels, pilots, government). Apple's competitors went after the store-front tablets: Nexus (Google Play) and Kindle Fire HD (Amazon) and the Nook HD (B&N online). As a result, there has been no obvious niche for Microsoft's Surface RT, something that was designed to preserve the Windows/MS Office legacy, not necessarily to appeal to tablet customers. Being late to the game has not been a winning approach.

Some observers are saying that when the much more expensive Intel-based Surface Pro comes out on February 9th, able to run real Windows software and more widely distributed, that its appeal will pick up. I don't expect that alone to overcome all the problems I've listed here.