Thursday, October 18, 2012

Microsoft Corporation (NASDAQ:MSFT): Morgan Stanley expects 3 mn Surface Tablets to be sold in 2012

Microsoft Corporation(NASDAQ:MSFT) is expected to sell about 3 million of its tablet PC, Surface in 2012, according to a forecast by Morgan Stanley analyst Adam Holt.

Holt has an Overweight rating on Microsoft and said in a note that the pricing of the Surface tablets were competitive with that of Apple and in line with his expectations.

On Wednesday, Microsoft had released the details of Surface including the pricing and pre-order dates. This is the debut of Microsoft in the tablet PC segment, which is dominated by Apple, which runs its own proprietary software and Samsung that is powered by Google's Android.

The Surface tablet will be running on Windows 8 software.

To be officially launched on October 26, the 32GB model is priced at $499 (add $100 for a Touch Cover keyboard) and a 64 GB version and keyboard for $699. There is a limited preorder via Microsoft’s website from October 23.

Holt said that in 2013 he expected about 9 million Surface tablets to be sold and said that the tablet is “an underappreciated driver for Windows revenue in FY13 and beyond.”

Analysing the pricing of the tablet, Holt wrote, “Pricing appears competitive: $499 for a 32 GB Surface is less than the $599 for a new 32 GB iPad with WiFi, while $699 for a 64 GB Surface plus keyboard is consistent with the $699 cost of a 64 GB iPad, with no keyboard-and MSFT’s flat keyboard is itself a differentiator."

"Morgan Stanley’s May 2012 Blue Paper on tablets suggested that 61 percent of potential tablet users saw the ability to use Office as among the most important features to consider when purchasing a tablet, and should work to MSFT’s benefit."

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