Will Windows 8 crack the surface?
Firm sales numbers for Microsoft's Windows 8 and its new Surface
tablet will not be available for three months, but it may be clear long before
then if it has a hit on its hands.
"We can definitely gauge it by chatter," said Emily
Chan, an analyst at Bernstein Research. "There is a slight learning curve,
so I don't think we will see that big pop that iPad saw."
Microsoft is desperate for the new-look, touch-friendly Windows 8
to grip customers' imaginations, as it looks to regain ground lost to Apple and
Google in mobile computing and shake up the moribund PC market.
Perhaps more important is its new own-brand tablet called the
Surface, available only through its own stores and website, which will
challenge Apple's iPad head on.
"I'd want to know the sales — and return
rate — of the Surface," said Sarah Rotman Epps at tech research
firm Forrester. "But those numbers will be hard to get since Microsoft is
the only retailer."
Early reviews of the Surface have been mixed, generally praising
the slick hardware, but faulting battery life and the limited software and
applications available.
Some worry that the first Surface model, which runs on a
stripped-down version of Windows 8 called RT that is not compatible with old
Windows programs, will cause some confusion and dissatisfaction among
customers.
The three models for sale on Microsoft's U.S. website are already on back order,
suggesting strong demand, but it is not known how many Surfaces Microsoft has
manufactured.
"The fact it's back ordered is indicative that there's
consumer interest," said Michael Gartenberg, an analyst at tech research
firm Gartner. "How Microsoft introduces it, evangelizes it and explains it
will determine long term success."
Microsoft has not said if it will reveal sales figures for Windows
8 or of the Surface before its next scheduled earnings on Jan. 24. The
company tends to trumpet good news and stay silent otherwise.
After the launch of Windows 7 three years ago, CEO Steve Ballmer waited only a month to announce strong sales. A year later, he waited only 10 days to report record-breaking sales of the Kinect, the motion-sensing add-on for the Xbox. But Microsoft has never shared the sales of Windows-powered phones, which have a lowly 3 percent of the market.
"I would definitely take it a sign that it's not super, super
strong, but I won't take it as something negative," said Chan at
Bernstein, who is expecting 8.3 million Surface sales by the middle of next
year.
That averages out at about 1 million a month, a third the rate of
the iPad, which notched up its first million sales in 28 days and has now sold more than 100 million units,
averaging about 3.2 million a month.
Gartner forecasts that Surface and other tablets running Windows
RT will sell about 2.3 million units this year and 9.3 million next year,
grabbing about 2 percent and 5 percent of the worldwide tablet market,
respectively.
Door-busters
Retail activity will be closely watched. Microsoft will have more
than 60 brick and mortar stores open for the release of Windows 8 on Friday,
half of them 'pop-up' stores that will stay open for the holiday shopping
season.
Third-party retailers are cautiously optimistic.
"We have seen pretty good response to our pre-orders for
Windows 8," said Best Buy spokesman Jeff Haydock. "Quite honestly, I
don't know what to expect from Friday. I don't know if there will be lines or
not. My sense is it will take some time for people to kind of come into the
stores and check it out."
Best Buy may give some color on how PC sales are going when it
reports earnings on Nov. 20.
Wal-Mart Stores Inc, the No. 1 U.S. retailer, said U.S. pre-orders
for Windows 8 PCs "have been better than expected."
Online retailers Amazon.com Inc, Newegg and TigerDirect have been
silent on Windows 8 pre-orders.
The full impact of PC sales on retailers will not be evident until
chains report same-store sales for November.
Quick reaction
One early indicator of Windows 8's success will be the contents of
the online Windows Store. Microsoft has had a harder time drumming up interest
among developers for Windows 8, given the risk that there will be fewer users
than competing platforms.
Microsoft will not disclose numbers, but there are expected to be
5,000 or so third-party apps available to U.S. users, in comparison with the
iPad's 275,000. Some big names such as Facebook will be missing.
In social media, the tenor of comments on the Twitter hashtags
#Windows8 and #Surface will give an indication of their reception after Ballmer
unveils them both on Thursday.
Many users likely will be shocked by the new design, which
dispenses with the Start button and features square tiles for apps.
"Public reaction to the new UI will depend how well Microsoft explains why 'different' is better and teaches how the new experience works," said Gartenberg. "That all starts on Thursday."
Industry trackers are expecting a bump for PC sales in the last
two months of the year, but not enough to rescue the whole year, which is
forecast to dip for the first time since
2001.
Some analysts had expected an uptick in production of laptops
ahead of the Windows 8 launch, but PC makers facing an uncertain global economy
have been wary about committing.
Chip maker Intel, which is a good gauge of future PC demand due to
its position early in the production process, expects the PC business to grow
at only half the normal seasonal rate in the fourth quarter.
Chief Executive Paul Otellini recently told analysts he expects to
have a better understanding of the success of Windows 8 in 90 days.
Stephen Baker, an analyst at retail research firm NPD Group, is
expecting a 10 percent jump in PC sales for November and December over last
year, but said comparisons will be difficult given a profusion of new devices
and the volatility of year-ago data.
Fourth-quarter PC shipment numbers from research firms Gartner and
IDC will not be published until early January, although analysts say PC makers
might start to drop hints about demand before then.
