Saturday, 20 July 2013

A suggestion that the microsoft surface has out sold the Google nexus 10

Editors note – Considering the accomplishment of the Asus nexus 7, the Google nexus 10 was not available within the google play shop for weeks. On offer around the 13th of November 2012, and released a month following the Microsoft surface it is reported within the title below the surface has outsold the nexus 10, no set information are announced but the proof shows an interesting pattern.

Benedict Evans’ look at the Nexus 10 sales number makes for interesting reading but his kicker at the end, that the Microsoft Surface devices were outselling the Nexus 10′s, caught my eye. When you look at the numbers, it tells an interesting story on Microsoft’s future in the tablet/laptop space.

As with most consumer technology, actual sales figures are hard to come by, but with some lateral thinking and reading of analyst reports, it’s possible to come to an approximate number. And when you do that, you get the interesting result that Microsoft’s Surface tablets have outsold Google’s Nexus 10.

Okay, the numbers. Nexus 10 numbers are from Evans, who takes the relatively unique screen size of the Nexus 10 tablet, identified as ‘xlarge XHDPI’ in the development data that Google provides. Take these numbers, exclude China, and apply it equally to the Google Play user base (which Google now use for all their Android usage numbers) and Evans comes out with an initial figure, albeit with caveats, of 680,000 Nexus 10 tablets in use.

Microsoft Surface sales numbers are also hard to come by, but Bloomberg’s call of 1.5 million Surface RT and Surface Pro devices is in line with many analysts, so let’s run with that number. Even allowing for some give and take in the calculations, Microsoft’s Surface is doing better than the Nexus 10. The question is does this matter?

I’m not sure it makes a huge difference to Google. The Nexus line is aimed at the geekerati and the developers, so simply getting it out there and into the hands of the coders and influencers is enough for them. It helps promote Android tablets, which in turn has a halo effect on all tablets, and provides Google with more users and eyeballs to monetise.

For Microsoft the case is a little more intriguing. Certainly Surface as a brand is nowhere close to the sales of the iPad (over 23 million units sold). But if you take the Surface Pro (which Bloomberg reckons makes up around 400,000 of those sold units, and that’s with just one month of availability in the quarter), and give Microsoft a healthy margin on the unit of around $500 on the Pro, that gives Redmond’s Surface division a potential revenue of $200 million.

Microsoft’s adjusted Windows revenue for the quarter was $4.62 billion, which means the Surface Pro contributed around 4% to the Q1 2013 numbers (I’ve not included Surface RT numbers in here, but I’d expect them to be making a positive contribution as well).

Now have Surface Pro on sale for a full quarter, and assume there will be some economies of scale and more efficiencies in the retail process over the year. If you wanted an early sign on how Microsoft was going to operate in the ‘post-PC’ era, you’ve got one here.

Yes the volumes are low, and the Surface range is not as attractive as the iOS choices available. But if Microsoft can build up the sales of the Surface Pro in 2013 and reach four to five million unit sales a year, they will have a healthy income stream from their Surface range. Much like sales estimates, there is conjecture and assumption in making a jump from 400,000 sales in one month and extrapolating a similar sales level throughout the whole year, but it’s not an impossible jump to make. It’s certainly within Redmond’s reach.

For Google, the Nexus 10 is almost a technology demonstrator. But Microsoft’s Surface is a key part of the company’s future, and sales of the hardware are a key part of their strategy. The advantage to out-selling the Nexus 10 is that Microsoft are reaching more than the developers, hackers, and geekerati that the Nexus 10 reaches… but they need to keep reaching out and selling to create a place in the new mobile computing era.

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