Surface RT Sales Estimate Cut To 1 Million

Microsoft sold 1 million Surface RT tablets in the holiday quarter last year, an analyst estimated, about half of what the company was previously thought to have sold.

UBS AG analyst Paul Thill provided the estimate in a research report this week. Thill originally estimated that Surface RT sales would top 2 million for the quarter ended Dec. 31, but revised his forecast after polling "gloomy sentiment" among buyers during the period.

Thill also cut his earnings per share estimate for the quarter by 8 cents, to 76 cents. Analysts surveyed by Thomson Financial, on average, expect Microsoft to post EPS of 75 cents when it reports fiscal second quarter earnings on January 24th. Revenue is estimated at $21.68 billion.

Thill's report is the latest bad news for Windows RT, which launched Oct. 26 of last year.

[ Is Microsoft's new operating system really on pace to match early Windows 7 sales? See Windows 8 License Sales Top 60 Million. ]

Just days after Steve Ballmer at CES touted it as one of Microsoft's key allies in the battle for the tablet market, Samsung last week killed plans to launch in the U.S. a device based on the OS, a derivative of Windows 8 designed mainly for portable systems.

Samsung senior VP Mike Abary told CNet that the South Korean electronics maker does not see sufficient demand from retailers to justify launch of the previously announced Ativ Tab. Abary said retailers' interest in Windows RT is only "modest."

He added that customers may be confused by the OS, which, unlike full-blown Windows 8, can only run software preinstalled by Microsoft or apps downloaded from the Windows Store.

"When we did some tests and studies on how we could go to market with a Windows RT device, we determined there was a lot of heavy lifting we still needed to do to educate the customer on what Windows RT was," Abary said. "And that heavy lifting was going to require pretty heavy investment." Abary said Samsung may still launch the tablet in some international markets.

Last year, HP confirmed that it had scrapped plans for a Windows RT tablet, based on lukewarm customer feedback.

Microsoft developed Windows RT to run on ARM chips made by Qualcomm and Nvidia. But Samsung's move leaves Lenovo, Dell and Asus as the only major OEMs developing products around the OS for the U.S. market.

Microsoft itself entered the market when it launched Surface RT in October. Redmond's concern that hardware makers may not fully get onboard with Windows RT was partly behind its decision to go into the business itself.

Microsoft plans to release Surface Pro, which runs Windows 8 Professional, early this year.