Markets

Is Microsoft's Surface Really Outselling the iPad?

Microsoft 's Surface is showing signs of overtaking Apple 's iPad. In October, the Surface generated more revenue than the iPad among a particular group of buyers.

Microsoft Surface Book. Image source: Microsoft.

According to a report released earlier this month by 1010data , U.S. buyers shopping online spent more money on Surfaces than they did on iPads. 1010data's report is inherently limited, but it represents a major milestone for Microsoft's Surface business.

Online is only one piece of the market

It's unlikely that Microsoft's Surface outsold the iPad overall, as most notably, 1010data didn't take into account U.S. shoppers buying in-store. The Surface is available at a wide variety of retailers, including Microsoft's own stores, but Apple has a larger retail presence. In its fiscal fourth quarter 2014, the last time it broke out the performance of its retail operation, Apple stores generated about 12% of Apple's total revenue, a fairly sizable amount. 1010data also didn't sample foreign buyers or enterprise customers.

At the same time, the comparison is intrinsically unfair to some extent. In October, Microsoft released two new Surfaces -- the Surface Pro 4 and the Surface Book. The later, with its detachable screen, can function as a tablet, and 1010data cited it as part of the reason why Microsoft's Surface revenue edged out Apple's iPad. But the Surface Book is much more of a laptop than it is a tablet -- away from its keyboard base, its battery only lasts a couple of hours. A would-be buyer considering the Surface Book will likely see it as more of an alternative to Apple's MacBook Pro. Indeed, Microsoft makes that comparison itself . Even the more tablet-like Surface Pro 4, with its full version of Windows 10, isn't truly comparable to the iPad. In its marketing and it its events, Microsoft often compares the Surface Pro line to Apple's MacBook Air.

Microsoft sells a wide variety of Surface models, and Apple sells a wide variety of iPads. But the average Surface is more expensive than the average iPad. According to 1010data, over the last 12 months, the average iPad sold for $392, compared to the average Surface, which retailed for $844. So, even generating more revenue, Microsoft likely sold fewer Surfaces to online shoppers.

In addition, last month, Apple released the iPad Pro. Starting at $799, its Apple's most expensive tablet by far, and it should boost Apple's total iPad revenue. The iPad Pro obviously wasn't included in 1010data's October data.

The iPad's decline

Still, it's a significant achievement for Microsoft's hardware business, and more evidence that Apple's iPad continues to struggle. According to 1010data, October was the first month in 2015 it saw U.S. online shoppers spend more on Surfaces than iPads.

Apple's iPad business has been in decline for nearly two years. For the last seven quarters, iPad sales have contracted on an annual basis. The iPad -- which once appeared on track to become Apple's largest business -- has fallen to fourth place, and could eventually become Apple's smallest segment. Microsoft's Surface business, meanwhile, has had some variation -- last quarter Surface revenue fell on a sequential basis -- but has been trending upwards, breaking above $1 billion for the first time earlier this year.

In January, both Apple and Microsoft will turn in earnings reports that include the month of October. That should provide a better comparison between the two businesses.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Is Microsoft's Surface Really Outselling the iPad? originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MSFT AAPL

Other Topics

Stocks

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More