Microsoft lacks Plan B for Surface line

The struggle experienced by Microsoft Corp. in the sales of its Surface tablet line indicates that the software maker misread the market and lacks a backup plan, according to an analyst.

The company was critically mistaken in its assumption that it could sell the Surface RT device during the holiday season of 2012 and that its more expensive Surface Pro would “just fly off the shelves” when it was introduced later, said Patrick Moorhead of Moors Insights & Strategy.

When things didn’t turn out as they thought, Microsoft was unable to react quickly because it “didn’t have a Plan B,” he said.

He attributed the lack of urgency to an inability to shift gears.

Microsoft’s slow expansion of commercial sales of its struggling Surface line is proof that the company had no backup plan after completely misreading the market, an analyst said today.


Microsoft reports $900M hit on poor Surface RT sales


“This goes back to their gross miscalculation,” said Patrick Moorhead of Moor Insights & Strategy. “This goes back to their belief that customers want what they think they delivered. They thought they would sell a ton of Surface RTs in the holiday season [of 2012] and that Surface Pro would just fly off the shelves.”

And when that didn’t happen, Microsoft was at a loss. “They didn’t have a Plan B,” Moorhead said referring to the company’s slowness in moving to get the Surface Pro to corporate customers.

It was only last week that Microsoft announced it would be selling the Surface in Canada and 18 other countries through a two-tier plan. The plan involves a select number of distributors selling the devices to a limited number of resellers who would in turn sell the devices to their corporate clients.

Microsoft explained that this measured approach gave them more time to gather feedback while the company grew is business channel.

However, analyst firm IDC estimates that Microsoft was able to ship only 300,000 of its Surface RT and Surface Pro tablets in the second quarter of 2013. By contrast, rival tablet seller Apple Inc., moves 14.6 million iPads, while no less than 28.2 million Android-powered tablets were sold during the same period.

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