Microsoft strategy 'killing' Surface sales

Microsoft's strategy of selling its Surface tablet solely online and in its US retail stores has led to a "lack of retail exposure" that is "killing" sales of the product, new research claims.

The new Microsoft Surface tablet computer
The new Microsoft Surface tablet computer Credit: Photo: Reuters

Detwiler Fenton, a Boston-based wealth management firm, said yesterday in an analysis that Microsoft may sell 500,000 to 600,000 Surfaces by Christmas, far below its previous expectation of one to two million.

The report described a lack of distribution as "killing the product" in the US market.

“Mixed reviews and a [$499 or £399] starting price tag certainly don’t help, but lack of retail exposure at Best Buy [an American appliance store] and others is severely depressing sales,” the report said.

The Surface is available to purchase from Microsoft stores and online only in the US, and is currently online only in the UK and Europe.

Microsoft has been monitoring the success of its US retail stores before committing to opening similar shops in the UK and Europe, and yesterday's report will further dent confidence in any retail venture.

There are currently just 31 Microsoft stores and 34 smaller popup stores for Christmas in the US serving a potential market of 350 million people. By contrast, Apple has opened 250 stores dedicated to selling its products and related accessories in the country, with a further 35 in the UK.

Microsoft has operated a "guerilla marketing" strategy in the UK in the last week, with Surfaces being promoted in Picturehouse cinemas and coffee shops rather than traditional venues such as department stores.

The Surface was launched worldwide in late October.

Microsoft refused to comment on the report itself, but a spokesman told the Telegraph: "We’ll listen to our customers, learn from them, adjust and adapt the strategy, and open additional stores as it make sense.

"While we are exploring many areas for future retail locations, we have no additional new store locations to share at this time.”