Only 1.5M Surface Devices Sold Since October 2012

There certainly seems to be no question that Windows 8 isn't performing as Microsoft expected. Even its own branded Surface tablets are experiencing a slow adoption rate – so slow that Microsoft isn't releasing actual numbers. OEMs, retailers and market watchers generally see what's going on, hoping that some magical marketing formula will finally ignite some interest in the consumer market.

That spark in Windows 8 may rely on many factors. For one, cheaper prices enabled by possible lower licensing fees from Microsoft. A larger portfolio of touch-based solutions that won't break the consumer bank is another. Even more, consumers understanding that the desktop still exists may also boost adoption.

Sources claim that Microsoft has only sold around 1.5 million Surface units total since the Windows RT version launched in late October. They break down the numbers even further, explaining to Bloomberg that Microsoft has only sold just over 1 million Surface RT units – those based on the ARM architecture and Windows RT – since its debut. Microsoft originally ordered 3 million Surface RT units, and even expected to sell 2 million units in the December quarter alone.

But Microsoft's move to only offer the device through its Microsoft stores, which numbers just over 60, likely hampered sales in 4Q12 -- the company didn't open up sales to additional retail outlets until December. Market confusion could also play a part in poor sales, as consumers may simply not see a need to purchase a Windows-based tablet if it doesn't run their software. As for Surface Pro, the x86-based Windows 8 Pro tablet went on sale in early February, and has since only sold 400,000 units – a starting price of $900 for a tablet isn't exactly consumer friendly.

There's speculation that a lack of applications in the Windows Store is hurting Surface sales as well, especially the Windows RT model. The Redmond company claims that more than 47,000 are currently available, yet there are more than 300,000 apps for iPad. Microsoft's storefront also lacks a number of heavy-hitting apps including Facebook although just this week Twitter launched its own standalone app for the new platform.

Overall this is not good news for Microsoft given it's the company's first direct attempt to tackle Apple and Google on the tablet front. "It’s pretty clear that things were bad entering the year, and at least for the moment they’re getting worse," said Alex Gauna, an analyst at JMP Securities LLC in San Francisco. "The path to a successful Surface, in the same way that they were successful with Xbox, is not very clear to me right now."

CNET claims that the number of Surface Pro units sold thus far is not a bad start. But in the quarter that ended in December, Apple sold 22.9 million iPads, and worldwide shipments reached 128.3 million units in 2012 alone. Facing a declining PC market which converts into lost revenue, Microsoft needs better Surface unit sales, plain and simple.

"The tide continues to go out on PC sales as consumers and emerging market users prefer tablets and smartphones to Windows based PCs," said Nomura Holdings Inc. analyst Rick Sherlund. "Windows 8 has failed to ebb the receding tide."

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