According to UBS, Microsoft likely sold 1 million Surface tablets during the holiday sales cycle. This is down from the analyst’s previous sales estimate of 2 million units for the product line.
Things to keep in mind: at an average selling price of more than $500, given that Touch and Type cover push the Surface past the $600 mark, just for the holiday season the Surface is more than a half billion dollar business for Microsoft. It will be a billion dollar enterprise this year, several times over by the end it seems likely.
This is key for Microsoft, as business units in its enterprise use the billion dollar mark as a benchmark: it’s the point of having ‘made it.’ Thus, the Surface team will join the other large Microsoft divisions in its first full calendar year, and first consecutive twelve months. In Redmond, this is success.
The company obviously wanted more. 1 million Surfaces is a fraction of the supply numbers that were floating about earlier in the last few months of 2012; Microsoft had hoped to sell a multiple of the 1 million figure.
As its CEO Steve Ballmer noted, the company hoped to sell “a few million” Surface tablets in the “coming year.” If he meant the 2012, or the first 12 months of the device isn’t clear. That said, if the Surface project had failed to reach 7 figures in its first go with consumers, it would have been an embarrassment.
However, akin to the Windows Phone project, the Surface enterprise is one that Microsoft intends to invest in for the foreseeable future. Thus the million units, while not spectacular by any measure – Apple is expected to have moved 20 million iPads during the same period – is enough of a start; the market didn’t repudiate the device wholesale.
Naturally, Windows 8 plays a role in this; like the Surface, sales of Windows 8 have been enough, but not fantastic. 1 million Surfaces is 1 million more tablets than Microsoft has sold before. It’s no where near enough, but it will suffice for now. Companies with more than $50 billion in cash can afford to invest.