Apple's (NASDAQ:AAPL) iPad Pro outsold Microsoft's (NASDAQ:MSFT) entire family of Surface tablets last quarter, according to research firm IDC. Apple sold an estimated 2 million of the 12.9-inch tablets, while Microsoft sold just 1.6 million Surface tablets (including the Surface 3, Surface Pro 3, and Surface Pro 4). This contrast sharply with a recent report that suggested Microsoft's tablets were gaining ground on the iPad. In short, Apple's iPad business remains in decline, but Microsoft hasn't dethroned the Cupertino tech giant -- at least not yet.
About one in ten
Apple sold a total of 16.1 million iPads last quarter, generating revenue of $7.08 billion in the process. That was down significantly from the same quarter last year, when Apple sold 21.4 million iPads for $8.98 billion. Although the iPad's popularity fell, its average selling price rose, from about $419 to around $436.
The addition of the Pro model to Apple's iPad lineup likely played a large role. Starting at $799 and topping out at $1,079, the iPad Pro is Apple's most expensive tablet by far. Although Apple reports total iPad sales each quarter, it doesn't break out individual models. Still, if IDC's estimate is correct, the iPad Pro represented around 10% of the tablets Apple sold last quarter.
Surface is growing, but remains far behind iPad
Microsoft doesn't break out Surface sales, but it does disclose Surface-related revenue. Last quarter, Microsoft's Surfaces generated revenue of about $1.35 billion, up from about $1.1 billion in the same quarter last year, for a gain of more than 22%.
Notably, Microsoft added an entirely new model to its Surface lineup last quarter -- the Surface Book. Like the other Surface devices, the Surface Book is a hybrid -- capable of functioning as both a tablet and a laptop -- but is far more laptop than tablet. As such, IDC did not include it in its tablet data. Even if it had, it seems unlikely to have tipped the scales in Microsoft's favor -- starting at $1,500 and topping out at more than $3,000, the Surface Book is a high-end, low-volume device.
In December, 1010data reported that Microsoft's Surface had outsold Apple's iPad among a particular group of buyers -- U.S. shoppers buying online during the month of October. That might have been the case, but it obviously wasn't enough. Whether it was brick and mortar retail stores, holiday shoppers, or international buyers, Apple's iPad was far more popular in the fourth quarter.
Replacing the PC with a tablet
Microsoft has long viewed the Surface as a PC alternative. "[It's] the tablet that can replace your laptop," Microsoft has declared since the Surface Pro 3 made its debut in 2014. Apple hasn't been as explicit with its messaging for the iPad Pro, but the device's ambitions are similar. "Why would you buy a PC anymore?" Apple CEO Tim Cook asked The Telegraph just days before the iPad Pro made its retail debut.
When it comes to raw sales numbers, Microsoft's Surface is at a disadvantage compared to the iPad Pro, simply because it faces intense competition -- not just from Apple's iPad Pro, but from a host of similar devices within its own ecosystem. It wasn't on sale in the fourth quarter, but the upcoming Galaxy Tab Pro S stands out as a similar, yet compelling alternative to Microsoft's own Surfaces. Buyers interested in a gigantic iOS device, in contrast, have but one choice -- the iPad Pro.
Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. 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.