Does Anyone Actually Use Microsoft's Surface?

It's one thing to look at market share figures based on unit sales, but it's another thing to look at how much consumers are actually using their devices. Judging by a recent report from Chitika Insights, not a lot of people are using Microsoft's (NASDAQ: MSFT  ) new Surface tablet.

No surprises
Surface was launched about a month and a half ago, and Steve Ballmer has already said that sales are off to a "modest start." Some analysts think Microsoft will sell less than 1 million units in the fourth quarter, which would be a shortfall compared to the 3 million to 5 million units that Microsoft has reportedly ordered from suppliers.

Chitika ran a study based on the number of ad impressions it delivered via its ad network in the U.S. and Canada to get an indication of usage for both Surface as well as Google's (NASDAQ: GOOGL  ) new Nexus tablets. The Nexus 7 was launched in July while the Nexus 10 debuted in November. In this race, the Nexus lineup is (as expected) faring much better than Surface. Nexus tablets grabbed 0.91% of web traffic while Surface's share was a measly 0.13%.

Source: Chitika Insights.

I say "as expected" because Android has been on the tablet scene for much longer than Microsoft, and the Nexus 7 has seen healthy sales since its launch over the summer at the aggressive $199 entry-level price point. In contrast, Microsoft is relatively late and its Surface tablet starts at $499, in direct competition to Apple's (NASDAQ: AAPL  ) iPad.

In September, Apple said the iPad was 91% of tablet web traffic. The company saw that as an indication that consumers weren't using competing devices, which comprised the remaining 38% of the market in terms of units.

In related news
In a separate study based on a similar methodology, Millenial Media (NYSE: MM  ) said that ad impressions on the iPad Mini are showing strong growth as sales of that device ramp up. The online advertiser said that the iPad Mini was seeing daily growth of 28%, topping the impressive 19% figure that Amazon.com's (NASDAQ: AMZN  ) Kindle Fire was putting up after its launch a year ago.

Source: Millennial Media via AppleInsider.

Millennial Media believes these figures show that the iPad Mini will be the "must have gift" this holiday shopping season. There's no specific mention of Amazon's newest Kindle Fire HD tablets that were just launched. The larger 8.9-inch version already saw a brief sale with the e-tailer offering $50 off the already low $299 price, which suggests it's not selling as well as the smaller version.

Amazon's 8.9-inch Kindle Fire HD is the most affordable of the full-sized heavyweights, but Google's Nexus 10 at $399 is a viable alternative for consumers willing to fork over another $100 for an incredibly high-resolution display.

Why it matters
The reason that these implied usages statistics are meaningful is because consumers aren't likely to upgrade a tablet that they're not using. Low usage means that buyers don't perceive a lot of value in the device, which means the company hasn't done a good job conveying its value proposition.

While players like Amazon and Google aren't profiting directly on the hardware, so unit sales don't help the bottom line, they still need customers to be engaged in order for them to buy content (in Amazon's case) or tap into online services (in Google's case). For companies looking to make money up front like Apple and Microsoft, they're hoping consumers upgrade their hardware as frequently as they can afford to and no one upgrades a tablet that's gathering dust.

Judging by these figures, a lot of those Surfaces might be doing just that.

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.


Read/Post Comments (11) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 11, 2012, at 9:16 PM, dwilh51183 wrote:

    I have one, but its a joke. I think I am going to donate it to GOODWILL or HABITAT FOR HUMANITY and use the tax write off against the new IPAD4 I am going to buy.

    I have learned my lesson...."When it comes to technology...no one builds better stuff than APPLE.

  • Report this Comment On December 11, 2012, at 10:25 PM, tbyrd58 wrote:

    Just finished a tech conference and their hardware expert announced he's ditching his iPad for the Surface with the upgraded keyboard. Of course with the work he does, his iPad cost $1400 to equip.

  • Report this Comment On December 11, 2012, at 10:37 PM, JaanS wrote:

    Good article Evan. Particularly "Why it matters"

  • Report this Comment On December 11, 2012, at 10:45 PM, marv08 wrote:

    As with icebergs, it is mainly about what is beneath the Surface. A sweating stinking monkey boy does not suffice.

    I willingly admit that the tile interface is working rather well on a smartphone; if I were not happy with my iPhone 5, the HTC 8X, a pretty well designed phone, not that Nokia crap, would be my rescue. And even that this was MS's very own work, which puts them far ahead of all the Apple copycats. But seriously... the tile GUI does not work on tablets, not on TVs via a Xbox and most definitely not on laptops and desktops. It's a toy GUI for small screens and quite good at that. Don't impose it on bigger devices where it does not work.

    MS, drop this 'one size fits all' nonsense and you will gain 100% credibility in no time.

  • Report this Comment On December 11, 2012, at 10:48 PM, marv08 wrote:

    @tbyrd58: Equipping an iPad at $1400? What does that involve? Jesus' foreskin and the Grand Wazoo?

  • Report this Comment On December 12, 2012, at 1:12 AM, micropunk wrote:

    Interesting. Surface comes out OCT 26th. There are some delays in people getting them. Then an 'insights' report shows negligible use from the U.S. and Canada, from November 12th to November 18th 2012. 6 day sampling, 3 weeks or so after the Surface was introduced. (Article doesn't say that though) Biased much?

  • Report this Comment On December 12, 2012, at 10:09 AM, techy46 wrote:

    Surface RT is a great mobile media and notebook device with half the weight and twice the functionality. Now that Best Buy, Staples and Walmart, next to girly iPad, will be selling them it will be fun to watch the form expand to cover 7"-12" sizes with ARM and Intel chips. Bye, bye overpriced Apple toys.

  • Report this Comment On December 12, 2012, at 10:43 AM, HyPhy wrote:

    This entire study could be flawed by one simple characteristic: One set of devices blocking the Chitika advertising network, and not the other.

  • Report this Comment On December 12, 2012, at 10:55 AM, HyPhy wrote:

    Also, the graph shown exaggerates a delta of 0.78%, with no stated margin of error.

    In other news, two statisticians died last week by drowning in a river that was, on the average, 2 inches deep.

  • Report this Comment On December 12, 2012, at 2:33 PM, chilero wrote:

    The "modest start" comment was taken out of context and then repeated all over the web. He was referring to distribution.

    I'm not sure why the article was targeting only MSFT when it could have just as easily targeted GOOG. Better yet it should have targeted both as they are both in a difficult battle against the iPad(s).

    "Months after being made available the Google Nexus line is a dismal failure with less than 1% web traffic! Are they collecting dust?"

    MSFT also just announced an increase in production to fill retail channels at Staples, Harvey Norman, JB HiFi and possibly Best Buy.

  • Report this Comment On December 12, 2012, at 6:49 PM, TheRealRacc wrote:

    Nothing like another Microsoft Surface article that revolves around Windows RT. Tell us something we don't know.

    I dare all journalists to resist writing an article about the Surface until the real Surface comes out.

    iPads will continue to dominate the RT. iPads will not be able to compete with Pro. Simple answer: its not a tablet. It's a real computer. Finally, a real toy that will actually allow for productivity.

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