Microsoft Shouldn't Count on Surface Mini to Reverse Its Tablet Slide

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Image: Mashable, Christina Ascani

By Pete Pachal2014-04-25 19:45:11 UTC

Microsoft Surface sales were way down last quarter, according to the company's earnings report. That's no reason to panic — the previous quarter was the holiday, after all — but the drop is so large that there may be more behind it than seasonal hiccups.

Revenue from the Surface was nearly cut in half, Microsoft reported, declining from $893 million to about $500 million, or about 44%. While revenue grew 50% year-over-year, that's still a big dive. By comparison, Apple's iPad revenue declined 33% over the same period.

See also: The Problem With Windows 8

By holiday last year, it looked like the Surface — which was responsible for a nearly billion-dollar write-down in Microsoft's 2013 revenue — had overcome its growing pains. The second generation of the hardware released in the fall generally got better reviews than the first, and Windows 8.1 addressed many of the software problems. Price cuts for the original models helped, too.

Now the Surface appears to be struggling again. The Surface 2 (as opposed to the Surface Pro 2) is one of the only devices left that runs Windows RT, the variant of Windows optimized for tablets at the cost of running older Windows apps. There are now plenty of other tablets that run full Windows 8.1, and it may be that consumers, absent seasonal discounts, are simply opting for those models.

There's also the hole in the Surface lineup that gets more glaring every day: There is no "mini" version. Small-screen tablets like the Nexus 7 and iPad mini are a dominant part of the market, and even though Windows 8.1 supports those models, Microsoft has so far declined to release a Surface Mini.

That will probably change in the coming months as rumors about just such a device have heated up. Microsoft is said to be on track for a spring launch of the Surface Mini, and cases for the device recently popped up on Amazon, first reported by ZDNet, suggesting the launch will come in mid-May.

Will the addition of a tiny Surface be enough to buoy Surface sales? Given the precipitous drop and timing of releases, it stands to reason that Microsoft can really only move Surfaces when they're cheap (a new Surface 2 starts at $449, without a keyboard). A Surface Mini, if priced comparably to the iPad mini, could go a long way toward finally getting Microsoft fully in the market.

However, the drop in Surface revenue suggests that the tablets' main selling point — that they excel at productivity-oriented tasks that other tablets struggle to accomplish — has limited appeal. That goes double now that the iPad has access to Microsoft Office, previously a key differentiator for Windows RT devices like the Surface.

Since small-screen tablets are typically used more as consumption devices, the "get things done" message will resonate even less for a Surface Mini. If Microsoft doesn't offer a different take on its tiny tablet, going small won't do much to help its tablet line hit it big.

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Topics: Microsoft, Surface Tablet, Microsoft Surface Tablet, Surface 2, Surface Mini, surface pro 2