Microsoft Slashes Surface Orders As Sales Struggle

By Khurram Aziz | Dec 06, 2012 01:34 PM EST

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Microsoft has slashed the number of Surface RT tablets on order with the Original Design Manufacturers in Asia by half, according to some reports, while other Windows RT-based tablet orders are also seeing weak sales.

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The news comes as some analysts warn that the software giant's selling strategy for the Surface tablet, relying solely online and in its US retail stores, has led to a "lack of retail exposure" that is "killing" sales of the product.

"Microsoft originally expected to ship four million Surface RT devices by the end of 2012, but has recently reduced the orders by half to only two million units," Taiwanese-based technology site DigiTimes said.

Microsoft released its Surface RT tablet in October, along with its revamped Windows 8 and Windows Phone 8 operating system, in an effort to close the gap between Android and Apple smartphone and tablet devices.

In November, Microsoft CEO Steve Ballmer said sales of the Surface tablet were modest but still expected to sell between 1-2 million devices by the end of the year.

However, Boston-based brokerage firm, Detwiler Fenton, said in a research note that that figure is trending towards the 500,000 - 600,000 because the company's strategy was in "disarray".

"Lack of distribution is killing the product," Detwiler Fenton said in a statement published on All Things D. "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." 

The Surface RT runs Windows RT - a special version of the Windows 8 operating system designed to for mobile devices utilizing the ARM architecture, such as tablets.

DigiTimes also said that other manufacturers which have released Windows RT tablets, including Asustek Computer, Samsung Electronics and Dell, have seen poor consumer demand for those devices.

The news site speculates that the slow demand could lead Microsoft to bring out its Intel-based Surface Pro tablet, which runs the full version of Windows 8, before the end of the year, rather than January 2013 as planned.

"The Intel-based version of Windows 8 is far more attractive to the market than the Windows RT version as consumers today can't ignore the fact that they may just be a version of a program that they want to run built on the old architecture which the ARM-based version doesn't support," Ken Dulaney, a mobile technology analyst at consultants Gartner, told the BBC recently.

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