1 Good Sign for Microsoft's Surface

The doubters are out in force (myself included) with Microsoft's (Nasdaq: MSFT  ) imminent Surface tablet launch, particularly in light of the pricing strategy that the software giant is pursuing. By starting entry-level pricing at the same price point as Apple's (Nasdaq: AAPL  ) iPad, Mr. Softy is asking for trouble.

Skeptics be damned, because there's already one good sign for Surface's prospects: the base $499 model pre-orders have already sold out. While it's impossible to know how many units that could entail, it's certainly a positive indication of demand for Microsoft's new tablet. New pre-orders placed through Microsoft's online store are quoted shipping times of "within 3 weeks."

Source: Microsoft.

Google's (Nasdaq: GOOG  ) Nexus 7 that launched this summer saw similar interest out the gate, with models being sold out at its Google Play storefront as well as at third-party retailers. Investors haven't seen any official or third-party estimates on Nexus 7 unit volumes quite yet, but by all accounts it's selling reasonably well.

Perhaps the most amazing aspect of base model Surface pre-orders selling out is that consumers hardly know anything about the device. At Microsoft's unveiling, members of the tech media weren't even allowed to handle the device personally. In fact, the device even crashed during its demonstration. Microsoft PR reps are the only people that have laid hands on it under very controlled circumstances.

Now, I'm not saying that buying a Surface is a horrible idea altogether. In fact, I'm genuinely intrigued by the innovative interface and ambitious strategy that Microsoft is undertaking. However, pre-ordering in general places blind faith in a device that you've never seen. No one knows a whole lot about Surface other than Microsoft. That also means consumers think the device will sell out immediately and that they won't have a chance to test drive one in a Microsoft retail store before choosing to take it home. With the company reportedly ordering up to 5 million units this quarter, I doubt it will sell out.

It's a good sign that demand is there. Now let's see if Microsoft reports unit sales figures.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 17, 2012, at 5:15 PM, EquityBull wrote:

    Probably 100 units pre-ordered now sold out. Creating artificial demand trying to use apple's strategy. I can't see how consumers would buy this over ipad

  • Report this Comment On October 17, 2012, at 6:26 PM, TMFNewCow wrote:

    EquityBull, I'm with you.

    -- Evan

  • Report this Comment On October 17, 2012, at 6:31 PM, TMFCrocoStimpy wrote:

    Oh so, so, cynical. I'll bet you are off by a couple of orders of magnitude...... :)

    I'm hopeful for the success of the Surface, but far more from a "if it works then we get some more healthy competition" angle than from any real analysis. My emotion as a former developer is getting the best of me.

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