Microsoft to build 3-5 million Surface tablets this quarter: report

Summary:Ahead of the Surface release later this month, Microsoft is gearing up to produce a "large volume" of the Windows 8-powered tablets this quarter alone.

Microsoft is preparing to begin a "large volume production" of its first branded tablet, due for release later this month alongside the firm's next-generation operating system, Windows 8.

Citing component supplier sources in Asia, the Wall Street Journal said the software giant is planning on building between 3--5 million Surface tablets in the fourth quarter, an increase on the amount IDC analyst pegged earlier this year, speaking to sister site CNET.

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Microsoft's Surface tablet, expected on October 26. Credit: Microsoft

Microsoft's figures resonate with Amazon and Google for their Android-powered Kindle Fire and Nexus 7 tablets respectively, according to the sources, but the proof of the pudding will boil down to price. 

Speaking to CNET's Brooke Crothers back in August, IDC analyst Bob O'Donnell expected Microsoft to produce "a little more than 3 million Surface tablets" in the run-up to the busy (and highly lucrative) Christmas holiday season. The figure presented by sources speaking to the Journal suggests Microsoft has significant demand for the long-awaited tablet, despite enterprise-focused users having no clue as to what the price of the device will be. 

It comes only a few weeks after Microsoft chief executive Steve Ballmer suggested that Microsoft may sell "a few million" over the next 12 months  in an interview with The Seattle Times.

In the interview, Ballmer hinted at rivalry and competition with the iPad , which remains the enterprise and business user's favorite. According to research firm IHS iSuppli, Apple has a 70 percent share of the entire tablet market during the second quarter of 2012.

Apple sold 17 million iPads in the third quarter . Despite its enterprise appeal, out of the wider consumer market the enterprise slice is the thinnest. Again, depending on the pricing, Microsoft may bulk up its revenue tables with a high profit margin device, but enterprises spending in bulk will not appreciate the blatant money-grab. 

Can the Surface compete with the iPad? Likely not -- at least in sales and the consumer market. Crucially, if it can win the hearts and minds of middle-managers with already increasingly tight spending IT budgets, that will be the key to the Surface's success.

Topics: Windows, Microsoft, Tablets

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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