How to overcome Apple’s (NASDAQ: AAPL) iPad dominance of the tablet market? No problem, Surface is a better, more complete solution. How is Microsoft dealing with falling PC sales? No problem, the PC is just evolving.
Apple iPad users, despite the overwhelming popularity of the platform, are “frustrated” by the tablet’s limited functionality and productivity, said Gates, and Microsoft Surface is just the ticket to set them free.
“With Windows 8, Microsoft is trying to gain share in what has been dominated by the iPad-type device,” he said. “But a lot of those users are frustrated, they can’t tie it, they can’t create documents, they don’t have Office there, so we’re providing them with the benefits they’ve seen that have made that a big category but without giving up what they expect in a PC.”
Gates didn’t mention Surface’s lack of cutting edge apps or its limited distribution or consumers' confusion over Windows RT and Windows 8, but who’s counting?
As for Windows 8, Gates termed it “revolutionary” because it “takes the benefits of the tablet and the benefits of the PC and it’s able to support both of those. So if you have Surface or Surface Pro you’ve got that portability of the tablet but the richness in terms of the keyboard or Microsoft Office of a PC.”
Gates also said that it’s going to be more difficult to distinguish tablets from PCs, referring to manufacturers building notebook/tablet convertibles with detachable displays. Acer is the latest PC maker to offer just such a device with its new Aspire R7, showcased in New York earlier this week.
Researcher Strategy Analytics estimated Microsoft shipped 3 million Surface tablets worldwide in Q1 2013 for a 7.5 percent share of the 40.6 million tablet units shipped globally during the period. Limited distribution, a shortage of top-tier apps and market confusion are holding sales down, the researcher said. With buzz growing that Microsoft is readying a 7-inch Surface model, it will be interesting to see if it can close the gap on Apple in that manner.
By comparison, Apple shipped 19.5 million units worldwide in the quarter, a 65 percent year-over-year uptick, while global Android-based tablet shipments rose 177 percent to 17.6 million units.
Strategy Analytics' numbers show that while the PC market is in the doldrums, the tablet segment is exploding, although not as wildly as in 2012. In Q1 2013, while tablets showed 117 percent worldwide growth year-over-year, shipment growth slowed significantly from the 146 percent expansion of Q1 2012.
At the close of Q1 2013, the market share for Android tablets had climbed from 34.2 percent to 43.4 percent while iOS-based tablets had declined from a 63.1 percent stake to a 48.2 percent share, when compared to the same period last year, according to Strategy Analytics.