Morgan Stanley’s Adam Holt released a research note on the Microsoft Surface where he suggested Microsoft will be selling 3 million of the tablets, which are priced to be competitive with the Apple iPad, in the last 3 months of the year.
He also expects Microsoft to sell 9 million devices in 2013, saying the device is “an underappreciated driver for Windows revenue in FY13 and beyond.”
“Pricing appears competitive: $499 for a 32 GB Surface is less than the $599 for a new 32 GB iPad with WiFi, while $699 for a 64 GB Surface plus keyboard is consistent with the $699 cost of a 64 GB iPad, with no keyboard-and MSFT’s flat keyboard is itself a differentiator. The $599 Surface bundle (32 GB tablet + keyboard) costs the same as a 32 GB iPad, but > 50% of iPad users also purchase an iPad cover (~$50 at retail) and ~15-20% of iPad users buy a keyboard (~$100 at retail), suggesting that >50% of iPad users are willing to pay ~$650 for a tablet + cover, and 15-20% are willing to pay ~$700 for a tablet + keypad,” he wrote.
He continued “This math also excludes any impact from the inclusion of Office with Surface which is not available on iPads. Morgan Stanley’s May 2012 Blue Paper on tablets suggested that 61% of potential tablet users saw the ability to use Office as among the most important features to consider when purchasing a tablet, and should work to MSFT’s benefit.”
Microsoft’s share price did not see an appreciable impact from the start of pre-orders of the Windows tablet, closing $0.02 down on Tuesday at from the Monday close of $29.51, and overall down from the 52 week high of $32.95, suggesting the market is not really expecting Microsoft to succeed in this venture.
Hopefully, like with the Xbox 360, Microsoft will enjoy proving them wrong.