Microsoft plans to sell 3 million Surface tablets in 2012. Too few or too many?

An IDC analyst says the production target means the slates won't only be sold in Microsoft retail stores.


IDC analyst Bob O'Donnell recently told our sister site CNET that Microsoft is gearing up to produce 3 million Surface tablets -- primarily the Surface RT flavor powered by ARM chips, due on October 26, and not the Intel-based Windows 8 Surface version, due a couple of months later -- by the end of the year. Is that number wishful thinking or too conservative?

While 3 million seems like a hefty target, it may actually be low-balling demand a bit. In an interview with Wired magazine, Forrester analyst Sarah Rotman Epps points out that Amazon sold nearly 5 million Kindle Fires at the end of 2011. In comparison, Apple reported 17 million iPads were sold in its 2012 third quarter.

Epps tells Wired that this may be a case of Microsoft purposely under-promising, though it may also factor in that Windows 8 tablets will be sold by other manufacturers. While they may not be pleased that they are competing with Microsoft, a number of major brands like Dell, Lenovo, and Samsung plan to build Windows 8 tablets in various flavors.

O'Donnell is skeptical that Microsoft will wind up selling the Surface RT at an eye-popping $199 price point -- though he says the company could do that via subscription fees a la its recent Xbox promotion -- but he does believe that the 3 million production target means one important thing. That amount is far too great for the company to sell just through the handful of Microsoft retail stores: "You can’t build that many products without having a much wider distribution strategy." (Then again, Google has done well selling most of its Nexus 7 tablets through its online store.)

In addition to the Nexus, Microsoft's new Surface RT tablets will be launching around the same time that new Kindle Fires and a mini iPad could be available. While those are smaller slates, they will take some focus away from the Surface debut -- what appear to be conservative production numbers may reflect the ultra-competitive tablet market Microsoft is jumping into.