Is Microsoft Trying to Blow This?

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All right, this is beginning to get ridiculous. Even as its competitors turn up the heat, Microsoft (NASDAQ: MSFT  ) can't get out of its own way with its Surface Pro tablet rollout. As noted in an article a few weeks ago, when Microsoft first made its upgraded tablet available to the North American masses, what should have been a red-letter day turned out to be anything but. And now, it looks like the rest of the world is in for more of the same.

The leader of Microsoft's Surface Pro efforts, Panos Panay, asserts that the demand for Surface was so overwhelming, it led to an almost immediate lack of inventory. But prospective customers made it clear from their comments on last month's blog that the sell-out of Surface tablets had more to do with Microsoft's dropping the ball, and less with overwhelming demand. That North American rollout fiasco only makes Microsoft's latest Surface availability news so disheartening.

The past, revisited
In his blog last month announcing the big rollout, Panay said that consumer response to Microsoft's Surface, "has been amazing. We're working with our retail partners who are currently out of stock of the 128GB Surface Pro." But reading the comments section of that same blog left us with an entirely different story: One of poor planning, lack of inventory, and a host of upset people.

Unfortunately, yesterday's missive is more of the same. On the one hand, Microsoft's latest Surface-related blog indicates its "phased approach to expansion" will continue in new markets beginning later this month. That sounds as if Ballmer is actually giving consumers legitimate information. But, not so fast.

For its Surface Pro rollout in countries outside the U.S. and Canada, we're left to ponder what Microsoft means by "the coming months," a phrase also used in its most recent blog. Sometime in the "coming months," folks in the U.K., Australia, New Zealand, China, France, Germany, and Hong Kong, will no doubt get to experience what we have -- frustration.

Nearly all of the 33 comments left on Microsoft's most recent blog, just like when the Surface rollout was announced in North America last month, are written by people wanting to know how Microsoft could mess this up so badly. Here are a couple of snippets, which sum up the mood of Microsoft's global customers awaiting Surface Pro: "How exactly does this help us with a UK release timescale?" And, "I need a device!!!... but I guess Surface Pro will never get to México... Months for UK? Germany? France? well... I've lost any hope I had... I'll have to buy an iPad." Ouch.

I'm trying to remain bullish as Microsoft shifts to a world of mobile and cloud computing; it's the right way to go, and Microsoft can't get there fast enough. With its strong financials and stellar 3.3% dividend yield, Microsoft still offers investors both growth and income potential. But the Surface Pro rollout is becoming a fiasco of epic proportions, even as the biggest of the big hitters in the tablet market are ratcheting up their games.

Thursday's article discussed Samsung's goal of doubling tablet sales in 2013; it's now targeting as many as 40 million units this year in an effort to oust Apple (NASDAQ: AAPL  ) and its iPad from the top of the global tablet heap. Samsung's objectives reinforce what we already know: Tablet makers have a lot at stake, and they're getting aggressive. Apple sold nearly 23 million iPads in calendar Q4 alone, and Samsung has made it clear it intends on overtaking Apple in what is becoming an exploding market.

Like Microsoft, Google (NASDAQ: GOOGL  ) isn't forthcoming with its tablet sales information. What we do know is that Google's Nexus tablet partner, Asus, jumped to fourth in global tablet sales in calendar Q4. You can bet Google and its CEO, Larry Page, aren't comfortable in fourth, and intend to rival Apple and Samsung in the years to come.

As for Microsoft, CEO Steve Ballmer, Panay, and the rest of the Surface Pro team can't get off the starting line. Catching the tablet leaders was always going to be a challenge for Microsoft; a late start, and butting heads with the likes of Samsung, Apple, and Google left Microsoft behind the eight ball before it even began. Now, when Microsoft needs its tablet rollout to go as smoothly as possible in an effort to make a dent, its once again dropping the ball.

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. Now, with problems surrounding the release of its own tablet, can Microsoft 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 (9) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On March 02, 2013, at 3:02 AM, prginww wrote:

    Just because the bottom feeders (ave people) couldn't get their hands on the PRO the 1st week of sales doesn't mean there wasn't any demand for it.

    The the trolls will always try to pull a negative trigger, be that a device out of stock or lack of demand.

    Lets face it, MS8 (stationary or mobile) is here to STAY and the market share will only get bigger.

  • Report this Comment On March 02, 2013, at 3:23 AM, prginww wrote:

    I won't say anything about the W8 phone, but I can say the following: when you compare Android and W8, Android is for kids that want to browse their FB or watch youtube, nothing more. W8 OS on the other hand, is for people that have $$$ and want a device that will optimize their $$$ making potential.

    As long as MS wont give out their Office to Android & Apple tablets and as soon as Dell gets privatized, you will feel what I'm feeling.

  • Report this Comment On March 02, 2013, at 5:27 AM, prginww wrote:


    As you say, W8 is here to stay.

    Like Vista before it.

    What was needed was another XP or W7, not another Vista.

    If MS had confidence in W8 and the Surface, they would have released the Surface RT with office and canned the Surface Pro.

    The sort of protective marketing that you propose may help MS in the very short term, but will ensure their decline over the medium and long term.

  • Report this Comment On March 02, 2013, at 9:18 AM, prginww wrote:

    Tim Brugger --

    Have you ever used a Surface Pro? What is your background? Are you strictly a blogger/journalist? Have you ever worked in the corporate world? Are you at techie or do you just write about technology?

    IPad and Android tablet are RECREATIONAL TOOLS -- for browsing the web, checking emails. It is used by housewife, grandparents, children playing games, high school english teachers. It is used for Motley Fools bloggers for writing short articles.

    In contrast, Surface Pro is used by PROFESSIONALS -- investment bankers, physicians, physicists, chemists, medical researchers. It is used by Fortune 500 firms -- by financiall firms doing monte-carlo analysis of investment alternative, by pharmaceutical firms doing research for find cures for cancers, by programmers at Google, Inc and Apple Inc. to come up with better algorithms.

    There is NO comparison between Surface Pro and Android/Ipad tablets.

  • Report this Comment On March 02, 2013, at 11:53 AM, prginww wrote:

    Microsoft is purposely withholding Office for Apple iOS and Android because they want to give their own product a chance to get some inroads. But for iOS and Android tablets, they have apps that one can use to view and modify Office documents, so it's not as big of a deal not to have Office.

    Plus, Apple iPads are completely outselling everything else, especially in those particular markets where they want a tablet for tablet's sake and not some half baked laptop that kind of turns into a tablet.

    IPads are used by PROFESSIONALS in all types of markets, don't be fooled by someone that uses Windows that doesn't do their homework. There is a hospital close by and of the 10,000 employees, they are all using iPads, and NOT Surface Pro. Apple has sold more iPads in a weekend than Microsoft has sold Surface Pros. NO CONTEST.

    Surface Pro is just a cheap low end laptop, it doesn't even qualify as an Ultrabook class laptop. Oops.

  • Report this Comment On March 02, 2013, at 12:01 PM, prginww wrote:


    FYI, i"ve sold PCs and Macs to both Corporate and Government for years. In the last 3+ years, Apple is crushing into Microsoft's monopoly. IPads are what people are using in most markets. They are finding uses in various professions where they didn't use a computer, or used a PC tablet and now they want an iPad. In the music creation/production industry, it's all about iPads for tablets. In the content creation, it's iPads. In the Medical industry, it's becoming more and more iPads. Architects/designers are using iPads. Retail stores and restaurants are using iPads and iPhones primarily. Even banks, financial institutions, and law enforcement and military are using iPads, so iPads are gaining a LOT of market share. So that Surface Pro hasn't done nearly that well. They've only sold a few million at most. Apple is FAR ahead of anyone else in the Education industry. There are school districts, Universities and even States that are going to the iPads for the education industry. Look at Arkansas State University. they have an iPad initiative where all incoming students get an iPad. Well, there goes your misleading BS.

  • Report this Comment On March 02, 2013, at 1:29 PM, prginww wrote:

    The whole Surface effort feels more like execs following a checklist of requirements to meet a shipping bonus:

    Create a touch screen hybrid (without bothering to include compelling software where touch provides demonstrable advantages while ignoring many of the problems that need to be addressed).

    Ship as soon as possible (even if the amount of units built is insufficient for even minimal demand)

    Demonstrate high demand by having "sold out" (which coincides with rushing the release to the point that most of the sale points only had 1 or 2 units while none of their own Microsoft stores had over a hundred, reports place it more between 30-50)

    Release press statements about "overwhelming demand" (even though they've made no effort to meet demand)

    This is bad leadership, plain and simple. Ballmer and his executive team are sacrificing the ecosystem of hardware OEMs which have faithfully propagated their highly profitable software so that they can pursue this ego trip of company stores (very expensive to rent space for, staff, and stock), hardware (lots of risk of low margins, stock management, and the very real risk of failure), and competing with their own partners. For what? To take a few more coins out of their partners pockets?

    Ask yourself this, Microsoft: what if it doesn't work out as you hoped? What if the OEMs turn to Google and Android for their software? Oops. Already happening. What if your flagship devices don't catch on? Oops again. Windows Phone marketshare has been on a steep decline the past few years with little evidence that it's going to reverse. Windows 8 is far behind Vista's acceptance rate. Neither Surface device has broken a million sales yet. How do we know? Microsoft would have cheered the news as soon as they could register the number.

    Microsoft's leadership is currently enacting what no outside company could accomplish: dismantling the partnership and weakening profitability. Microsoft was, and in some ways still is, a great company. Too bad their leadership is too blinded by their own vanity to see the impact of their decisions.

    In a way, I apologize for being so blunt. I am frustrated by Microsoft's mismanagement and the blind loyalty of a few fans who insist on upholding their leaders' decisions to the exclusion of all other possibilities.

    Like that ridiculous "only Surface can do real work". Real work that anyone can already do with a far cheaper and more capable laptop of any brand you can think of. Also, that person's inability to personally understand how "real work" can be done on other devices is far more a statement of their own limitations. Simple, test: instead of just mindlessly dismissing possibilities, go to where people are using them for "real work". You'd be surprised how much you will learn about the world beyond you own cubicle. Because whether you like it or not, it's out there and happening right now to the tune of tens of millions of units per quarter.

  • Report this Comment On March 02, 2013, at 5:23 PM, prginww wrote:

    I've been to every store in town to play with a Surface Pro, and sadly, every single one is misconfigured where it asks you to turn on the networking. Alas, the tablet/laptop is utterly useless to test out at the store. I just don't get why both Staples and Best Buy can't seem to get this right. All the iPads at Best Buy were working wonderfully. This makes it really tough for me to evaluate whether I want to get one.

  • Report this Comment On March 03, 2013, at 2:51 AM, prginww wrote:

    If you are even considering a high end home or business automation system, iOS is where it's at. Some are already using Siri integration for voice commands for home automation, there is far more development by various large companies in that industry and the possibilities are already endless.

    For those interested, check out companies such as Savant Systems, Crestron, AMX and Control 4 being amongst the top high end home and commercial automation systems.

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