Is This Tech Giant Falling Behind in a Critical New Market?

Eastern_Box_Turtle_HeadMicrosoft’s (NASDAQ:MSFT) attempt to recoup lost sales in the contracting PC market and break into the lucrative tablet market is being tripped up by the slow sales of its Surface devices. According to anonymous sources via Bloomberg, Microsoft has combined sales of approximately 1.5 million for both the Surface RT and Surface Pro versions of its tablet device.  Many analysts, including Brendan Barnicle from Pacific Crest Securities, are cutting their Q1 2013 earnings estimates for Microsoft due to poor Surface sales, reports Bloomberg.

In an attempt to duplicate Google’s (NASDAQ:GOOG), Amazon (NASDAQ:AMZN) and Apple’s (NASDAQ:AAPL) successful forays into the tablet market, Microsoft introduced its first computer hardware product in October of last year when it released the Surface RT tablet. The RT version of Surface is not compatible with older versions of the Windows operating system and is Microsoft’s low-cost tablet entry, with a retail price of about $499. UBS AG analyst Brent Thill had originally predicted that 2 million of these devices would sell in Q4 2012, but Microsoft has only sold about a million of its Surface RT devices to date, reports Bloomberg.

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The pricier Surface Pro, which is compatible with older versions of Windows, was launched last month and has sold about 400,000 units. The Surface Pro features a solid-state drive and retails for around $899. However, both the Surface RT and Surface Pro have failed to generate consumer excitement like Apple’s iPads or Samsung’s (SSNLF.PK) tablets have and are hampered by a shortage of popular apps, including the lack of a Facebook app.