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.
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: GOOG ) 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.