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12/14/2012
02:32 PM
Paul McDougall
Paul McDougall
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Can Microsoft Surface, Best Buy Save Each Other?

Microsoft needs to get its Windows 8 tablet in front of as many eyeballs as possible, and the retailer needs hot products to drive in-store sales.

Microsoft Surface Tablet: 10 Coolest Features
Microsoft Surface Tablet: 10 Coolest Features
(click image for larger view and for slideshow)
Microsoft said this week that Best Buy would carry the Windows 8 Surface RT tablet. Best Buy is bleeding cash, and Surface sales are slow --so it's a bit like pairing a cardiac case with an asthmatic. But if managed right, the combination could help both patients get off life support.

Microsoft has not commented publicly on Surface sales, but some analysts have said that they are running below the company's expectations. Analysts at Boston-based brokerage firm Detwiler Fenton last week pegged sales of Surface RT at between 500,000 and 600,000 units since the product launched on Oct. 26. By contrast, Apple sold 3 million iPads in three days following November's debut of the iPad Mini.

"Lack of distribution is killing the product," Detwiler Fenton said of Surface, in a research note published before the Best Buy deal was announced. Surface RT is also now on sale at Staples.

[ Will Microsoft introduce more hardware products beyond Surface? CEO Steve Ballmer suggests it's likely. ]

Just 4% of tablet buyers surveyed this week by Ipsos said they would choose Surface. Sure to be hurting sales is that until now it's been very difficult for potential buyers to literally get their hands on a Surface tablet. It had been available only through Microsoft's online store or at the handful of brick-and-mortar locations Microsoft has opened around the country.

Without being able to touch and feel the tablet, which is made of a cutting-edge alloy Microsoft calls VaporMg, consumers were likely to pass. That's where Best Buy comes in. The chain is hurting because shoppers will often kick the tires on products on its show floors, and then buy online for a lower price -- often tax free. That doesn't do Best Buy much good, but it does boost sales for the vendors whose products the store carries.

So how could Surface help Best Buy? At the very least, the widely hyped system is likely to increase foot traffic during the crucial holiday season as curious shoppers look to see what it's all about. Even if they don't buy the tablet, they might stock up on PC accessories and the like, which the chain sells at considerable mark ups.

That alone won't be enough to save Best Buy, which posted a net loss, after charges, of $13 million in the third quarter. But it's a start, and new CEO Hubert Joly appears to have some good ideas for moving the business forward. When he came on board in September, he spent a week working the floor at Best Buy stores, blue shirt and all, to gain a better understanding of the challenges faced by sales staff.

That led him to try to combat the "try here, buy elsewhere" problem by authorizing sales reps to negotiate price discounts on the spot. Best Buy founder Dick Schulze, meanwhile, is looking to take the company private.

Tech makers, including Microsoft, would do well to support Joly's efforts as much as they can. If Best Buy goes down, like its former rival Circuit City did, consumers will have few options when it comes to seeing the newest gadgets in action. A PC, tablet or phone isn't like a song or movie file -- you can't download a preview before buying.

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JPolk
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JPolk,
User Rank: Apprentice
12/15/2012 | 6:01:55 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
I hear a lot of pundits talking about the Surface and mostly in a positive way. However, you don't hear them talk about using it much. I managed to hear a passing comment from one who noted she just doesn't care for it. "Buggy and slow" I believe were the words she used. I kinda think her's was a moment of honesty that maybe others are just avoiding.
newyorkcitymale
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newyorkcitymale,
User Rank: Apprentice
12/15/2012 | 6:20:56 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
Maybe Microsoft got into the brick and mortar business because they're concerned that Best Buy might go under. Something like that could really hurt PC sales.
newyorkcitymale
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newyorkcitymale,
User Rank: Apprentice
12/15/2012 | 6:28:02 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
I own one and I don't find it slow or buggy. And, as far as looks go, I think it's the best looking tablet on the market (and that includes the iPad). But aesthetics are just a matter of personal taste. I prefer dark electronics. I also like how the Surface feels in my hands. It feels solid, but not heavy. The iPad feels fragile in my opinion... and kind of cold (maybe because it's made of aluminum).

Either way, for a first gen product, I think Microsoft scores an A.
VasyaPupkinsan
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VasyaPupkinsan,
User Rank: Apprentice
12/15/2012 | 7:40:08 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
buy a case with keyboard for iPad, a much more usable combination than that fugly touch cover for sure-feces.
VasyaPupkinsan
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VasyaPupkinsan,
User Rank: Apprentice
12/15/2012 | 7:41:45 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
PC sales are hurt not by business presence. They are hurt by crappy products.
EVVJSK
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EVVJSK,
User Rank: Apprentice
12/17/2012 | 3:07:25 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
Brick and Mortar is going to continue to have trouble because it has a tendency to add significant cost to the devices (in many cases without adding significant value for many). If Best Buy is aggressive on pricing (can't start out selling devices at SRP and expect to get much market share with an unproven product like Surface. If they price them to sell, they may make some money on accessories, value add, etc...). I also think Surface Pro is possibly where Best Buy may make some strides, but also only if they aggressively price.
One final note, I am accessing the site with an Android ICS tablet and it is MUCH slower than other IT sites with respect to loading, responsiveness, etc... Maybe you need to review how much content you are pushing to devices (not really interested in the mobile sites as they usually end up limiting interactivity too much).
melgross
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melgross,
User Rank: Ninja
12/17/2012 | 4:15:18 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
Both are made out of metal. Both get cold if the air temp is lower. No difference there.

It is heavier though.
melgross
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melgross,
User Rank: Ninja
12/17/2012 | 4:16:54 PM
re: Can Microsoft Surface, Best Buy Save Each Other?
The case isn't made out of a cutting edge alloy. It's made of injection molded magnesium. There's nothing new about that. The finish is what's different. No better or worse than the anodized aluminum alloy Apple uses.

As far as the lack of outlets goes, that's just nonsense. If Apple can sell over a million iPad Mini's from their web site in presales, and they can sell several million over the weekend alone of a new iPad, much from their web site, so can Microsoft, if they have a desirable product. So they certainly should be able to sell several million during the holiday quarter.

If they are struggling to sell these, perhaps it's because people simply aren't interested. Their silly Ads don't help. All they seem to be interested in showing are people dancing around, clicking on the cover/keyboards. There's no more than a couple of seconds of people actually using them. And people buy tablets so that they DON'T have to have a keyboard. These Ads make it pretty clear that Microsoft expects that you WILL need a keyboard. Exactly the opposite of what people want.

But then, Microsoft doesn't understand people's needs and wants. We saw that clearly with their Win Phone Ads, where they explained that people spent too much time on their smartphones, and that with theirs, you would take it out and put it right away. But people LIKE using their smartphones, so those Ads bewildered people, and turned them off.

They're doing the same thing here.
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