Analyst: Lack of Distribution Is “Killing” Surface

No-one except Microsoft really knows how well the Surface is selling, but speculation is rife.

Detwiler Fenton, a Boston-based brokerage firm, said in a research note today that Microsoft is likely to sell just 500,000 to 600,000 Surface RTs in the December quarter.

The analyst, a bit like Steve Ballmer, blamed it on poor distribution of the tablet.

“Lack of distribution is killing the product,” Detwiler Fenton explained. “Mixed reviews and a [$499] starting price tag certainly don’t help, but lack of retail exposure at Best Buy and others is severely depressing sales.”

Potential buyers are not able to get a hands-on with the device themselves, which can be a deal breaker with a new product like the Microsoft Surface.

Currently, there are just 31 Microsoft stores and 34 smaller holiday kiosks in the U.S. Given that paucity of stores, the average consumer’s is pretty likely to see the device in an ad, but unlikely to come across the tablet on sale.

As a potential buyer who just purchased a Lenovo IdeaPad Yoga 11 mainly because it was actually available in my local store, the story does ring true, but we will have to reserve judgement until Microsoft reveals official figures hopefully early next year.

Via AllthingsD.com

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  • freeiam

    This is the end of Micro$oft

    • Davey

      I wish it was the end of dumb comments…

      • Tumultus

        Then, what would we reply to? :)

    • oldjovian

      Yes, I think I can see the end of the world from here . . .

    • Schooner1984

      Actually in two more weeks, it is the end of everything, at least until the next end of time.

  • hysonmb

    I can understand sticking with the limited distribution initially because they would have to stock up and they said they didn’t want to compete with OEMs but, with so few stores and so many people spending money right now they’re missing a major opportunity. Then again, this is the same company that had a potential hit with Zune and failed to ship it to the majority of the world, maybe that lesson wasn’t learned.

    • J A

      “…they didn’t want to compete with OEMs.” Ok, so they designed the product only to decide to not sell?

      • Wyn6

        They designed the product as a kick in the OEMs backside and set it up to have limited sales. They wanted to push the OEMs, but not out of business.

        I’m sure MS will evaluate things in the near future, consult with partners, etc. and determine a course for the future. Ultimately, they understood that limiting distribution would in turn limit sales. Had they wanted to blow it out, they could’ve easily shipped to other retailers like Best Buy, Amazon, etc.

        They made a decision on the purpose the Surface would serve. It seems they are bearing that out.

        • randy williams

          They have gotten the attention that they wanted. Everyone in the world knows about it and many more want to buy it but can’t because Microsoft has not distributed enough. If they had they would have put a lot of OEMs out of business which is probably they reason a lot of OEMs are not putting out RT Tablets.

          Now that they have everyone’s attention they can now put the Surface PRO out to the masses in all major stores out there and make a lot of money on them. You have to remember that the Surface Pro is much more capable than the RT anyways. It is a tablet, laptop, and desktop all in one that looks beautiful and is slimmer than most laptops and desktops. If they don’t sell it enough as a tablet they could definitely get it off as a new type of DESKTOP..!!

      • hysonmb

        When they announced Surface, the OEMs got upset. Microsoft responded, saying that they wanted to develop a product to showcase the OS but they were not trying to compete with OEMs. Pretty much, they said they didn’t trust the OEMs to build hardware that would be compelling and for the most part it appears they were right. Many of the third-party hardware isn’t getting great reviews and doesn’t look like much more than rehashed Android tablets.
        So, no, they didn’t design the product to not sell. They designed the product to be a compliment to the OS since they didn’t trust partners to do it on their own. MS has taken a lot of the blame for bad hardware or the additional junk installed on Windows by others out of the box. They started the Signature program to get rid of the bloatware and now Ballmer has stated that they’re going to be in the hardware business so we can expect to see more MS branded computers in the foreseeable future. Hopefully they get them into more stores than their own, but, at least they’re finally making the effort to change the perception that Windows was the problem.

  • mike

    Yesterday a colleague asked me about my surface and I showed it off in just 3 minutes… he actually said, MY IPAD SUCKS… if it is easy for me to show off what is a great product… why doesn’t more people know about it?

    • picky

      Because nobody cares about it. MS doesn’t get it, fan boys don’t get it and they come every week with a new excuse why sales are not there. So this week we got a new excuse – distribution…

      • http://twitter.com/saqrkh Bilal Khan

        What, so Microsoft limiting Surface sales to 30 odd stores (worldwide) and a few kiosks isn’t a legitimate reason as to why Surface isn’t resulting in world changing sales? Get off your stool, the time of crap isn’t here or now. Lack of distribution is a genuine fact, just like the fact that Microsoft prefers coddling its OEM partners (in its statements anyways), and that OEMs have – simply put – been unable to effectively deliver.

      • http://twitter.com/bronzekid91 Maxi J. ✨

        I consider myself a “fanboy” I love Microsoft , but you are absolutely right about this , they need to stop masking the bad sales results with all these pety numbers. The truth is that the surface is doing really bad , and so is windows rt and w8. the key nowadays is price.

        • http://twitter.com/saqrkh Bilal Khan

          “No reason is good enough” is a great internal motto, one Microsoft should follow, but most of us aren’t MS. In light of this, we should look at these figures based on facts, among which include (1) thin distribution and (2) high pricing. That said, even if the Surface were cheaper, where would the masses go get one? You’d think Googling would be a simple process, but many people prefer going to stores and seeing the product for themselves.

    • http://twitter.com/bronzekid91 Maxi J. ✨

      Because it’s a Microsoft product. The surface is not bad at all, in terms of hardware or beats the iPad, but people dont care about Microsoft like they used to, they need to associate the product with the people , and like I said , bring the prices down . Google and amazon were smart in that tactic.

  • Mr_Pointy

    I bet that Microsoft has kept Surface away from traditional retailers to give OEMs the chance to establish their own Win8 product sales. Given that they have largely failed to deliver anything innovative themselves I think we will see both versions of Surface in traditional retailers by the time Pro launches. The OEMs had their chance and fluffed it.

    • randy williams

      Yep and now Microsoft is going to fully take the spotlight completely away from them and are even going to get them on desktops as well since the Surface Pro can be plugged into a display, with a keyboard and mouse as well.. This Surface Pro is more than just a Hybrid Tablet & Laptop it is a “DeskTopLet”

  • http://www.facebook.com/people/Croc-Ography/100003578319874 Croc Ography

    Completely agree with this article and even told MS on launch day I had $500.00 in gift certificates for Best Buy and they promptly told me that they were the only ones selling it. I bought a Nexus 7 instead. (BTW, it is a wonderful geek device!)

  • http://www.facebook.com/chrgeorgeson Chris Georgeson

    Nah, MS has it right, even though this sucks for sales. RT has not been properly been conveyed to the public so it’s great that BestBuy doesn’t have it in stock seeing how they wouldn’t be able to properly convey how great the product is and what is good but limiting about RT.

    If RT is a success (big if in my opinion) then MS should release it to stores.
    My opinion release Surface Pro into all major retail outlets.

  • http://www.facebook.com/bhairavpardiwala Bhairav Pardiwala

    I think lack of developer device Surface is killing MS

    and ms knows it

    question is what are you gonna do now?

    • TrickyD

      Release the pro?

  • disqustingtard

    2 years ago in a Microsoft meeting…
    Dude: OEMs are not selling PCs well
    Ballmer: WE’LL SHOW THEM HOW TO NOT SELL WELL!!

  • Surface CloverTrail

    Actually, Paul Thurrott is hinting that Surface is coming to Best Buy and Staples in the U.S. First he was hinting 2013. Now, the hint sounds like it might be even sooner than that. Of course sooner than 2013 would be within the next few weeks.

  • http://www.richspalding.com RichSpalding

    You think the US is bad, try the UK. No MS Stores or pop-up shops. Simply limited outdoor ads with nowhere to go and touch and try. Who’s going to spend that much on an unproven platform when the Apple Store is a mecca of perfect retail product experience. I’m actually in the market for a Surface Pro, but will need to touch it before buying.

  • http://www.facebook.com/markoostveen Mark Oostveen

    Just selling it worldwide through the microsoft online shop would already help. I can understand people that want to touch it first, but I think many would buy it without toughing and testing it in real life first. I would (for the Pro atleast).

  • http://twitter.com/bronzekid91 Maxi J. ✨

    I believe it’s the price of the surface that would be “killing” it as well as the price of all rt tablets.
    Why would a consumer buy rt , when they can get either a low powered win 7 netbook , or a sub $400 google tablet or dare I say , the iPad mini now. Microsoft needs to bring the rt price down , considering its not full W8 and that will disappoint/confuse consumers.

    • jimski27

      Because of situations like this. One of our guys came into the office yesterday and wanted to know how he could offload a lengthy video he took of an accident from his iPad. Not so simple without iTunes and a proprietary cable. Showed him my Surface and told him there were at least two ways I could get the video off of the device (USB & SkyDrive). Face it. These other devices are limiting. You get what you pay for.

  • http://www.facebook.com/profile.php?id=708677298 Alf Lenni Erlandsen

    I take no serious words from a person who would buy a Lenovo Yoga. Lamest “twisted” idea ever! You might as well buy a broken computer, cuzzzzz Its gonnn break!

  • wisedesi

    No matter how good RT is, it is 100$ too expensive. With this price they have should have included keyboard. Don’t give me Apple cover is expensive stuff. Apple asks for premium on all products and Microsoft is not Apple.

    Problem is Microsoft need to be sure if they want to in hardware game or not. If they want to then they need to go all in.

    Why would I buy $#399 + 100 table instead of buying Lenovo twist for $699. Surface pro price is good as they do come with digitizer just wish it was little bigger.

    Also issue with the windows 8 Touch device I have is that none of them comes with 1920×1080 resolution and touch. People want good quality/resolution touch laptop. Just no one is making at reasonable price. Tell me why a good windows 7 laptop can be found at $399 but just adding touch makes it $899. Hopefully it will improve next year as panel supply eases.

  • http://twitter.com/jasonc1991 Jason Choi

    wait… Wasn’t that the point? You know selling less than the partners?

  • MissingMatter

    This was the pragmatic strategy for Microsoft to take. Remember, this is their first experiment with selling a consumer personal computer device. Also remember that for a device to be a success, selling it is just the first step. The device also has to be robust, defect free, and you have to offer great support. For Microsoft, their ability to execute on a device like the surface is untested, and for them to announce massive global worldwide distribution right away would be complete folly.

    As the saying goes, better safe than sorry. Sure, you’re not going to get headlines that the Surface is selling millions upon millions of units if you limit distribution. But you’re also not going to get headlines that your support is terrible, which will affect future purchasers much more than “They didn’t sell enough.”

    Better to start slow and ramp up, I say.

  • MissingMatter

    This was the pragmatic strategy for Microsoft to take. Remember, this is their first experiment with selling a consumer personal computer device. Also remember that for a device to be a success, selling it is just the first step. The device also has to be robust, defect free, and you have to offer great support. For Microsoft, their ability to execute on a device like the surface is untested, and for them to announce massive global worldwide distribution right away would be complete folly.

    As the saying goes, better safe than sorry. Sure, you’re not going to get headlines that the Surface is selling millions upon millions of units if you limit distribution. But you’re also not going to get headlines that your support is terrible, which will affect future purchasers much more than “They didn’t sell enough.”

    Better to start slow and ramp up, I say.

  • http://www.facebook.com/chrgeorgeson Chris Georgeson

    Yup, no source for this 500k figure. I love analysts, “Well we can assume they are selling terribly so I’ll throw out this number!”. Remember people analysts aren’t really any more or less techie then you or I but they do love to guess and pass it off as fact.

  • JRV

    IIRC, whether or not the “within days” part of the rumor is correct, this has been the plan all along…initially sell at MS stores only, then elsewhere. In the long run, the fact that it was only sold at those 31 stores for a few weeks won’t make any difference, and will soon be forgotten. Did you REALLY think MS expected that selling Surface in just 31 stores, and just in the US, would make Surface a global hit? No, this was intentional. This strategy makes sense. In the near term, once they sell it elsewhere, the headlines will become, “Surface sales rise dramatically!”, contrasting with all the doom and gloom we’re seeing now. A pretty clever ruse with which they’ve kept Surface in the news all this time. The marketing telemetry gathered by selling only at their own stores for a time will doubtless be hugely useful to their marketing efforts going forward. Surface Pro will be the bigger hit, as this is still a desktop-dominated world. But Surface RT will hold its own at the lower end, for those few who need more than a tablet but less than a notebook.

  • Why?

    I’m saying that since day 1!
    I don’t understand why MS only sells it in their stores and worst: Why Surface is not for sale all over the world?
    Xbox 360 was released in the same week in every country. Why Surface didn’t? And why Surface Pro is not for sale yet?
    Today I had my first touchscreen Windows 8 hands on: an Ativ Smartpc with Intel Atom (tablet only) and an Ativ SmartPC with an Intel Core i5 (tablet with detachable keyboard) and I found out something I hate about it. I want to fully replace my current Windows 7 Laptop with a new Windows 8 tablet what means I need one with at least an Intel Core i5 and a keyboard but sometimes I just want to use the touchscreen what makes a removable keyboard dead weight! Microsoft was the only company how made the keyboard right and I can’t buy one because they don’t sell it in my country… I believe there are lots of people in the same situation as I am and that’s what I hate about Microsoft. They forgot how to sale their products!