Telling people that a product is short in supply and high in demand is probably on page one of the big book of retail tricks. Hearing that demand has far exceeded supply usually piques the interest of those consumers who are on the fence about buying a product, prompting sales. But consumers are having the exact opposite reaction to the low supply of 128 GB Microsoft
(NASDAQ:MSFT) Surface Pros tablets, which were made available at the launch this Saturday. After the tablet sold out at Best Buy
(NASDAQ:SPLS), and Microsoft’s online store in mere hours, many disappointed customers and industry observers took to the Internet to voice their frustration over Microsoft’s purported attempt to game the system.
Sites like the Surface Pro blog
, run by the device’s general manager Panos Panoy, and Reddit
have been flooded with hundreds of comments by disgruntled consumers unable to purchase the tablet. While some are simply criticizing Microsoft for failing to meet demand, others are threatening to shift their business to Apple
(NASDAQ:AAPL) and Google
(NASDAQ:GOOG) because of their disapproval. Considering that the Surface RT only accounted for 3% of tablets shipped in Q4 2012
, the last thing Microsoft can afford is losing customers to rival brands.
The problem is made even worse by Microsoft’s lack of transparency regarding tablet sales numbers. To date, Microsoft remains tight-lipped on how many Surface RTs it has sold, and it is likely that consumers will never know just how many Surface Pros were produced for the launch event. While the secrecy protects Microsoft's brand image to some degree, it has led analysts to make unfavorable predictions, with some now claiming that the RT might have only sold 1 million units in all of Q4.
To be fair, considering that the Surface RT may not have been a hit, perhaps Microsoft sincerely miscalculated the demand for its higher priced tablet. It’s more than possible that the Surface Pro’s higher price and untested positioning as a tablet/laptop hybrid made Microsoft uncomfortable with initially producing the tablet in large amounts, or that retailers didn’t want to carry it in great numbers. In an interview with PCWorld
, NPD consumer electronics analyst Stephen Baker largely supports this sentiment by saying, “Did they sell out because retailers only had two or three per store?... Maybe, but I don't see anything in the previous volumes of the previous product that would indicate this was going to be a huge seller.”
Despite the mixed reviews
, the Surface Pro seems to have a better following than its predecessor. According to a survey by Forrester Research
, the Surface Pro seems to be the preferred tablet among information workers who are considering a tablet for use at work, meaning that as many as 200 million new customers could be interested in the tablet. In addition, units for the 64 GB model are still available, though consumers seem less interested in this version because of its insufficient memory. It’s possible that Microsoft didn’t realize that the 128 GB model would be so much more appealing; had the company known that it would have been the preferred model, perhaps it wouldn’t have wasted as many resources on the 64 GB version.
Minyanville contacted Microsoft to ask about the shortage, but the company's spokesperson declined to comment. The company did release a media statement
saying that it is very happy that the demand for the Surface Pro is “so great” and that it’s working to get more units out to consumers as quickly as possible.
Although a specific date for a restock has not been set, the company would be wise to get more units out quickly before consumer disapproval becomes consumer attrition.
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No positions in stocks mentioned.