So the Microsoft Surface is still D.O.A. (as predicted a long time ago…)

“…One of the bright spots in Microsoft’s (MSFT) quarterly report last week was that Surface sales more than doubled sequentially. The software giant rang up $893 million in sales of its Windows-fueled tablet during the holiday quarter, [up from $400M in Q3.]

However, the more that one thinks about it, the worse that Microsoft’s $893 million in Surface sales becomes.


How many Surfaces did Microsoft actually sell during the quarter? Well, the Surface 2 starts at $449, but the Surface Pro 2 can set buyers back as much as $1,799. …the the cheapest Surface Pro 2 — the one running Windows 8.1 Pro instead of the scaled-down Windows RT operating system — starts at $899. So when Microsoft says $893 million in tablet sales it likely translates into a little more than a million devices.

Apple on the other hand sold more than 26 million tablets [$11.5 billion worth] during the [September] quarter. If we look at the unit levels sequentially, Microsoft’s sales grew by less than a million sequentially while Apple sold nearly 12 million more iPads than it did during the prior three months.”

Note: This is not meant as particularly pro-Apple, and Android sales figures are also impressive and are in essence blocking Microsoft’s entry into a lower-priced tier (which is likely why MSFT didn’t even try to enter it?). Exact sales figures  and revenues for Android tablet vendors are much harder to come by/break out however, so this comparison of Surface and iPads shall suffice.

The point being: Remember that the Surface was supposed to be the rationale for Windows 8’s formerly-known-as-Metro touch-centric interface, as well as MSFT’s entire “Devices and Services” strategy. From the formerly massively dominant PC OS vendor, such miniscule share for the Surface line is nothing short of embarrassing.

Let’s just say for argument’s sake that Android tablets sold the exact same number as iPads (it’s likely more in the direction of 60 / 40), so the total being 2 x 26M = 52M. 1M or so Surface tablets sold would be about 2% share!

Again, this is what Ballmer et al. essentially bet the farm on in terms of trying to regain some relevance in tablets and Mobile. Except that a 10.6″, 2 pound device (the Pro) qualifies as neither, as I predicted repeatedly since long ago (6/2012).

Will MSFT’s next CEO simply put an end to this entire embarrassment and kill the Surface line, in order to concentrate on all enterprise/cloud services, all the time?

No two ways about it: Microsoft hasn’t gone anywhere in Mobile so far

Screen shot 2012-04-09 at 1.24.26 PMWhile we are witnessing and analyzing what I at least take to be the slow-motion trainwreck that will be Windows 8/RT and the Surface RT tablet, it is worth bringing back to mind for a moment another already full-fledged trainwreck that is Windows Phone thus far. Nokia is still only selling Lumia phones at a 1 Million PER MONTH run rate in Q3.

Compare that to the 1 Million+ Android devices being activated PER DAY, as well as the recently announced 26.9M iPhones Apple sold in Q3, which is about a 300k per day run-rate. Microsoft and Nokia are going exactly nowhere, market share in Europe (which was supposed to be more Nokia-friendly than the U.S. market!)

“…Across the “big five” EU countries – the UK, Germany, Italy, Spain and France – Windows Phone now show[ing] a 5% share, up one point from a year ago.”
-> Guardian (many more sales stats there)

And TechCrunch recently wrote that “Windows Phone Is Taking Share From RIM”, which incidentally is dying and has been toast for a good while now. So when can we go ahead and declare that Windows Phone 7.x at least has been an unmitigated failure?

Yes, it is possible that things will pick up a smidge over time with WP 8.x, and some supposedly super-secret advantage of getting access to Windows compliant apps on a smartphone. Which so far is belied by the fact that there are very few such apps ready for Windows RT and the Surface RT.

Every review so far, even the largely positive trending ones, are complaining about the fact that the apps situation is looking very bad for MSFT, and Robert Scoble at least thinks from his mobile developer contacts he surveys regularly that that isn’t about to change much at all.

And you may say “who cares what Scoble thinks”, but in reality wasn’t the Windows RT and Surface RT launch supposed to be what would stem the tide of MSFT #PostPC era irrelevance and make everything better? So one would think that MSFT would have pulled out all of the stops to get a lot more apps developed, it’s not like they don’t have the funds to buy/bait developer interest directly.

So I just have to ask, what is the hold-up there?! Frankly, it doesn’t make any sense, especially since MSFT have already now been through the “chicken-and-egg” problem (essentially a vicious circle of negative reinforcers) re:low amount of apps / low sales / low developer interest / low amount of apps with WP7.x for about 2 years.

For Steve Ballmer, who once snidely remarked that he didn’t get Googles #Android / #mobile strategy, maybe the “learning curve” really is infinitely steep…?

REQUIRED READING: The Freight Train That Is Android – by Bill Gurley

Screen shot 2012-01-09 at 8.36.56 AMIf you care about #mobile and smartphones at all, it is crucial that you fully appreciate the depth of what is going on with Google’s Android strategy (which is why I’ve clipped a lot of key excerpts from this great post; by all means keep an eye on Bill Gurley, his stuff is usually excellent and in depth).

The only thing that they are lacking is Apple’s branding finesse, but it is pretty hard to compete with “LESS-THAN-FREE” in the long run…

Why would Google “bare [almost] any burden” (including the $12B purchase of Motorola Mobility, in large part to defend Android in the #PatentWars) to buy their way into this? Because… “The Future Of Mobile Is The Future Of Everything”.

From Abovethecrowd.com – The Freight Train That Is Android:

…the more I wonder if I too may have underestimated the unprecedented market disruption that is Android.

One of Warren Buffet’s most famous quotes is that “In business, I look for economic castles protected by unbreachable ‘moats’.” An “economic castle” is a great business, and the “unbreachable moat” is the strategy or market dynamic that heightens the barriers-to-entry and makes it difficult or ideally impossible to compete with, or gain access to, the economic castle. …

For Google, the economic castle is clearly the search business, augmented by its amazing AdWords monetization framework…and Google would clearly want to put a “unbreachable moat” around it. …

So here is the kicker. Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive. They are not trying to make a profit on Android or Chrome.

They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it…

Because they are “giving away” money to use their product, this creates a rather substantial conundrum for someone trying to extract economic rent for a competitive product in the same market.

This is the part that amazes me the most. I don’t know if a large organized industry has ever faced this fierce a form of competition – someone who is not trying to “win” in the classic sense. They want market share, but they don’t need economics. Imagine if Ford were faced with GM paying people to take Chevrolets? How many would they be able to sell?…

[First curated on Amplify.com]

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