Microsoft plans to add to Surface line-up with more models, better distribution

Microsoft is pressing ahead with plans to expand its line-up of Surface tablets, and is hoping OEMs will help it freslh out Windows 8 range of touch devices.
Written by Liam Tung, Contributing Writer

Microsoft is planning to expand its Surface line-up on several fronts: more models, wider availability, a broader range and ramped-up production. 

"We are going to expand geographically. We are going to expand the product line-up. We are going to expand retail distribution and capacity. So we look forward to continuing the growth of that business," chief financial officer Peter Klein said on Microsoft's Q2 earnings call on Thursday, according to a transcript by Seeking Alpha.

Despite rumours that Microsoft had slashed production of its Surface RT tablet, Klein said that it could not "in some cases" deliver the devices. 

"We saw some really great demand for some of the touch devices that we brought to market. In some cases, we didn't have the supply that we needed to satisfy that demand," he said.

Analysts have estimated Microsoft has sold around one million Surface RTs in the quarter, which may be nudged up in the coming quarter after it expands distribution to 13 new countries across Europe from February 14.

Klein reiterated several times that Surface sales were one of the top three components of its 11-percent total revenue growth, along with Windows retail upgrades and multi-year enterprise licensing deals.

But Microsoft's own tablet efforts make it just one character in a cast of Windows 8 OEMs that the company is using to flesh out its range of touch devices across different form factors and price points.

"From a price point, we learned what we have always suspected, which is this segmentation and differentiation. One of the powers in the Windows ecosystem, obviously, is the variety of devices and form factors and experiences at a variety of price points. We learned that that continues to be important," Klein said. 

Klein added that Microsoft was "working closely" with OEMs to ensure they bring the "right set of touch devices at the right price point depending on the unique needs of the individual", however those efforts may not be playing out as smoothly as hoped. 

As it stands, OEMs have only been able to hit the pricey end of the spectrum, and have reportedly failed, in Microsoft's view, to build enough touch-based systems, which now threatens to stifle efforts to ramp-up a rich ecosystem of form factors and price points.

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