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The Truth About Microsoft’s Sold-Out Tablets

Tech Surface 300x219 The Truth About Microsofts Sold Out TabletsThe shocking news arrived this weekend: The Surface 2 and Surface Pro 2, Microsoft’s second-generation “iPad killer” tablets, sold out in many stores.

Microsoft’s been trying for years to catch up to Apple in certain areas, releasing the now-discontinued Zune to challenge the iPod and designing its own operating system for smartphones. The company’s first attempt at building its own tablet was a disaster: Relatively few people bought the Surface RT, the base model, which started at $499, and Microsoft wound up having to take a $900 million charge at the end of its last fiscal year for unsold inventory and a $150 price drop.

Yet, according to a report from Mashable, the second iteration of Microsoft’s tablet, the Surface 2 and Surface Pro 2, was sold out at Best Buy stores in several states, on Walmart.com and on Microsoft’s website.

What’s going on?

Microsoft isn’t saying much besides that it’s excited to see the consumer response and is working to keep up with demand. We reached out to analysts and a Surface 2 owner for our answer.

Bottom line: Apple has little to worry about. Microsoft just seems to have figured out that it shouldn’t make so many devices, lest it risk another embarrassing write-down. And, apparently, the Surface 2 isn’t as bad as the first version, according to one Surface 2 user who got in touch with us.

Michael Cherry, the lead analyst of operating systems at Directions on Microsoft, an independent advisory firm in Washington that tracks the company, speculated that Microsoft “produced a smaller run with the intent of selling out.”

“They really made what they thought they could sell,” he said. “Good for them — they were right.”

The Surface 2 and Surface Pro 2, which went on sale this fall and start at $449 and $899, respectively, are Microsoft’s latest attempt to win share of the lucrative tablet market, which the company entered disastrously late. The original Surface models, first sold in 2012 and early 2013, didn’t do particularly well with consumers.

Microsoft sold $853 million worth of Surfaces during its most recent fiscal year. By comparison, “Apple’s iPad sales during roughly the same time frame were $33.2 billion,” The New York Times’ Nick Wingfield pointed out in September.

Sales of Surface tablets jumped to reach $400 million in the quarter that ended Sept. 30, and Microsoft sold more than twice as many Surfaces that quarter as the previous quarter, the Wall Street Journal reported. But the doubling was likely due to heavy discounts on the Surface RT, the Journal noted.

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