) CEO Steve Ballmer has made a bold (if not understated) claim
about the company's upcoming tablet. According to
, Ballmer said that Microsoft's goal is to sell "a few million
Surface PCs" in the coming year. He also said that there will be
375 million Windows PCs sold in the next 12 months.
The latter figure is impressive, to say the least. At a time
when Apple (NASDAQ:
) continues to increase its market share with
for the company's
fresh, industry-changing products
, Microsoft is confident that it will maintain its success with the
However, ZDNet's Mary Jo Foley questions why Microsoft would aim
to sell only a few million tablets. After all, Apple is expected to
30 million iPads
in 2012 alone. Foley believes that this is proof that Microsoft is
in this business to build a high-quality product and not simply to
beat Apple and scare its partners into building better
She is probably right. But to figure that out, investors did not
have to look any farther than Microsoft's previous devices. The
Windows maker did not produce Xbox 360 with the goal of defeating
Sony (NYSE: ) and Nintendo (
). Microsoft got into the video game business to capture some of
the growing market. Then, after building a console that sold only
25 million units while its lead competitor, Sony's PlayStation 2,
150 million units
, Microsoft wanted to beat the competition. After several years of
it finally has
Microsoft was able to achieve this goal not only by catering to
the core market (gamers) but by serving the broader market of
mainstream entertainment consumers.
The company failed to do the same with Zune, an ill-fated MP3
player. By the time the device was released, Apple had already sold
millions of iPods, which were faster, smaller, and more efficient
than Microsoft's device.
While the quality of these products ultimately dictated their
success or failure, their marketing strategies played an important
role. With the Xbox 360, Microsoft took a very broad approach,
promoting the console to anyone and everyone with a multi-million
dollar ad campaign that included a 30-minute special on MTV (which
featured music from The Killers, who performed at the conference
where Xbox 360 was officially unveiled).
Microsoft did not launch Surface with a sponsored TV program or
hire a popular band to play for the press. But by teasing Surface's
debut with a vague pre-show announcement, Microsoft did
successfully persuade the media to hype its device as the next best
thing. When the tablet finally arrived, the .
Long-term, Microsoft might be smart to tackle the tablet market
with a softer strategy. It will be almost impossible for the
company to sell as many units as the iPad, so why should Microsoft
promise to sell more units than it can? By announcing a
conservative goal, Microsoft can brag if it beats expectations. But
if the company promises to sell 20 million tablets and fails to
achieve this goal, critics will say that Surface is .
Last month, Global Equities Research analyst Trip Chowdhry
called on Microsoft to .
"One hundred million to two hundred million dollars [worth of
these] devices should be given away for free," Chowdhry told
Benzinga. "[Give them] to developers, educators, business users,
CEOs, for whatever reason."
Chowdhry estimates that Surface will retail for .
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.