True, no one is loading the Microsoft Surface RT up on trucks to go out to Big Lots stores yet, but it might not be long before the Redmond company might start considering doing that, as sales during the holiday quarter for the iPad competitor are reported to be somewhat underwhelming.
Shipments of the Surface RT device, which debuted last quarter, into the channel were about 1.25 million, but sales out of the channel “were significantly lower, maybe on the order of 55 to 60 percent of that figure,” said Rhoda Alexander, an analyst at iSuppli, citing the market research firm’s estimates.
That would mean sales of the tablet device would fall roughly in the 680,000 to 750,000 range. Not good.
According to Alexander, that kind of “sales out” percentage is not unusual, who added that she has seen similar percentages with newly introduced Android devices.
Alexander says she sees little evidence of continued production of the RT in the first quarter, as Microsoft tries to sell off inventory.
Such an issue isn’t unique to Microsoft, as the Kindle Fire faced excess inventory that carried over into the next quarter after its introduction, and Amazon temporarily cut production.
In addition to slow sales, it appears once they get out the door, the trick is making sure they don’t come back. The return rate on the device was “very high,” Alexander said. “If you put the high return rate together with low sell-through [sales out] rate, that’s indicative of a problem,” she said, adding, again, that the Kindle Fire initially had very high return rates and low sell-through.
One of the reasons for the high return rate? “It seems to be linked in a lot of cases to a steep learning curve of the [Windows 8] OS — which is not necessarily intuitive,” she said.
She says there is also a lack of interest from Microsoft partners in making RT devices. The question from them is, “where is the win for us?”
During last weeks earnings call, Microsoft CFO Peter Klein said a number of times that the Surface contributed to revenue. Although the company has so far refused to talk specific sales numbers for the device.