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Microsoft sells out of Surface Pro, just like the Zune HD did in 2009

Daniel Eran Dilger

Microsoft appears to be “sold out” of its 128GB tablet/notebook hybrid Surface Pro. Good news or bad?

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A Windows Enthusiast explains what selling out means

Selling out of your inventory means “the market has spoken,” says Ed Bott of ZDNet.

After being reminded that the Surface RT also “sold out” before becoming a clear flop in the winter quarter, Bott issued a clarification to explain why readers shouldn’t connect the dots and arrive at the conclusion that the Surface Pro selling out might not be an indication that it is actually selling well.

The fact that the low end model of the Surface RT sold out “suggests that buyers of the RT device were price-sensitive and were looking for something with a tablet-like price,” Bott answered.

“By contrast, the initial sell-out of the higher-priced 128 GB Surface Pro suggests early buyers are spec-sensitive and are skeptical of the available storage in the 64 GB device.”

So there you have it: “selling out” of a specific model represents a clear indication of exactly what customers want in real time. This is because subtracting an unknown number of sales from an unknown number of units in inventory provides clear proof that an unknown number of events have occurred.

Comparing this unknown number of sales events with a parallel figure derived by subtracting an unknown number of sales from an unknown number of units in inventory of a second model simply provides reliable proof that Microsoft is an unstoppable force in tablet computing. Whew! the iPad nightmare is over.

A sell out explains what Windows Enthusiasm means

Perhaps, however, it is possible that Microsoft just isn’t very good at producing and managing global sales channel inventories of a hardware product it has never sold before.

Even Apple, which has demonstrated spectacular skill and finesse in operational management over the past decade, has flubbed its production and shipments now and again. Except that when Apple does it, it’s clearly a case of leaving money on the table and failing to perform as well as it should have.

In the winter quarter, Apple screwed up iMac sales and didn’t accurately forecast the demand for either iPhone 4 or iPhone 5. On top of that, it couldn’t produce iPads fast enough to meet demand. “Selling out” for Apple is a problem, not a pile of horseshit for its fans to interpret as a Christmas pony waiting for them around the corner.

When Apple sells out, its most rabid fans take the company to task for screwing up. When failed products sell out, their fans hold up the inventory problem as evidence that somebody is actually buying a product that professional reviewers are expressing annoyance and disappointment over.

This all happened before

Unfortunately for Ed Bott and the “Surface Must Be Successful, Damn the Reviews” crowd, this isn’t isn’t the first time Microsoft has sold out of a product that subsequently did so poorly that the company abandoned the entire business.

Remember the Zune HD? That was just over three years ago in 2009, back before Microsoft scrambled to port Windows 7 to the ARM architecture for the Surface RT. It was widely reported to have “sold out” from Amazon to Newegg to BestBuy. Two years later it was discontinued because in reality it never sold well.

Sell out flops

Other devices that were reported by major news sources as having “sold out” include the 2009 flop of the WebOS Palm Pre. Last fall, even several Windows Phone 8 models “sold out,” alongside “sold out” sales of Google’s blockbuster dud, the Nexus Q. Sony’s flop, the PS Vita, was also reported to have “sold out” among some retailers.

Google also “sold out” of the Nexus 4 last fall, before it was deduced from serial numbers that it had only actually produced just 400,000 units of it over the entire quarter. Shockingly, you can “sell out” of a device just by not producing very many of them.

This was not unprecedented. In 2010 Google’s original Nexus One was also reported to have “sold out” before being canceled as a flop just months later.

Remember RIM? The company was reported to have “sold out” of its Blackberry Bold in late 2011, just years after the company had lost all relevance in the smartphone industry. How’d that work out?

In other news, the new Blackberry Z10 is currently reported to have “sold out” in the UK. So watch your back Windows Phone 8! There’s a new sell out in town ready to fight you for a very distant third place in the smartphone business.

20 comments

1 stormj { 02.09.13 at 2:08 pm }

Even if there weren’t clear precedents here, this would still be a case of journalistic malpractice due to gullibility.

But, when I was a boy, they put fewer copies of Zelda II in store so that there would be lines. This has been going on for 30 years, at least. To not know that isn’t just malpractice, it’s fraud. They are cheerleading for Microsoft, and this just proves it.

Hey, the Surface looks like a pretty cool thing, or at least potentially. A little bulky in this first iteration. But that can stand on its own. Who knows what the numbers are.

2 InfoDave { 02.09.13 at 2:16 pm }

What’s the opposite of a a FUDster. In trying to determine an antonym, I came up with Courage, Security and Confidence (CSC). Just off the top of my head I came up with Hype, Praise and Confidence (HPC). I’m not very good at this sort of thing. Anybody else have an idea?

None of this means diddly squat till we get some actual numbers. I think Microsoft over played their hand. The Microsoft Store is unable to process all that many orders in the short timeframe involved. They should have at least waited till tomorrow to run out.

3 danieleran { 02.09.13 at 2:25 pm }

I think part of the intent of publisizing “sold out!!” figures is the hope of certain fans that others will buy it, resulting in a successor with better specs and more value down the line.

But that thinking results in a balloon of sales expectations that more often than not pops, because in reality nobody is buying it.

In contrast, the original iPod, iPhone and iPad found real buyers amid significant criticism from the press, and those sales enabled Apple to return with better, faster, thinner versions afterward.

Ed Bott and Paul Thurrott think they’re doing damage control, but in reality they are just lulling Microsoft into a complacent death.

4 InfoDave { 02.09.13 at 3:35 pm }

That would be Rationalization, Complacency and Smugness.

5 Brau { 02.09.13 at 5:32 pm }

Well said Daniel.
… and MicroSoft’s strategy to produce low numbers while hoping for a vain “Sellout” belies an actual lack of faith at the management level that their product is good enough to sell in the millions. Apple’s delays are always clearly due to a lapse in supply (EI: white iPhones), not demand or short ordering.

Ps. The buyer is strange: I recall a delay when the iPhone 3G arrived. Many were complaining loudly in the local news, but I got the only one my provider received simply because I put my name on a waiting list. I asked how many people had put their name down and was surprised to find I was the only one. The rest simply went running from store to store asking if they had one. Peculiar.

6 sir1963nz { 02.09.13 at 11:03 pm }

I think the word “Microsoft” has taken on a new meaning:

Micro : Sales were very small
Soft: Demand is very low

7 gctwnl { 02.10.13 at 6:10 am }

Astute as ever. Liked the ‘unknown number math’ very much. Had to laugh because it is so idiotic how people reason and Daniel points that out so well.

OT: that reminds me of the recently approved new EU 7-year budget: B€960. Except that the pledged income from EU countries is B€908 and the EU is not allowed to make debts. So the phony budget is B€960 and the real budget is B€908. And how the real budget is divided into areas is not published. And nobody asks the question, which is what surprises me even more. But given how people react to ‘sell out’ maybe I should not be surprised.

8 John E { 02.10.13 at 11:20 am }

good job by DED skewering the MS fans desperately clutching at straws once again to hype yet another misbegotten MS Windows Everywhere fantasy.

let’s look at the scorecard for the year …

MS Great (much hyped by web pundits) Windows 8 New Era 2012-13:

Windows 8 OS – Despite channel stuffing license sales to OEM’s, actual sales are worse than Vista, even after huge 50&-75% upgrade discounts for months (now ending). near total avoidance by businesses, and consumer PC sales have nosedived. A Big Flop, so bad that it is accelerating consumers adoption of tablets as a PC alternative.

XBox – New focus of MS ecosystem, but nearing end of life, and sales remain depressed (like all game consoles) due to tablet competition. Stuck In Niche.

Windows Phone 8 – Despite all-in commitment by powerful Nokia, sales are modest at best, adding only a few % to Windows smartphone market share. Going Nowhere.

Surface RT Tablet – Supposedly major iPad rival, now proven DOA. Total Fail.

Surface Pro Tablet – All-in-one Windows miss-mash, combining the limitations of a tablet with the limitations of a notebook, at a high price to boot. Dead Man Walking.

Overall web pundit reaction to all this? MS is innovating the future! and Wall Street likes MS strategy, it likes it a lot.

now let’s look at Apple …

Apple’s 2012 Product Cycle:

OS 10.8 Mountain Lion – popular, with Mac computer sales continuing modest growth. A Hit.

iPhone 5 – Refreshed hardware setting record sales. Huge Hit.

Apple TV – Key extension of Apple ecosystem, “hobby” product sales continue to increase steadily (actually outselling XBox). Going Someplace.

iPad Mini – New mid-size model is very popular. Big Hit.

iPad – Updated model continues to sell well. Solid.

Overall pundit reaction to all this? Apple has gone stale and is in trouble! and Wall Street trashes its stock.

do we see a pattern here?

9 stefn { 02.10.13 at 2:16 pm }

FUD vs. CON. Control Our Narrative

10 stefn { 02.10.13 at 2:18 pm }

FUD vs. CUF: Cover Up Failure … Flops … Fiascos.

11 lahaina { 02.10.13 at 3:29 pm }

Goddamn the stupidity. On 1/31 I decided I better plunk down my $40 for Windows 8 Pro (last day of low price) as I know XP is going to die in 2014. I run four (4) Windows programs on a Parallels VM that I need for my business. I am an experienced computer user. It will take me a year just to get Windows 8 tamed. The sucker doesn’t even have an email client that supports POP3 and you need to search and surf just to find out where the stupid MS Essentials email client can be found and…so now they have some stupid hardware to go with their stupid hardware. Purity of Essence. Good luck.

12 The Mad Hatter { 02.10.13 at 4:06 pm }

Bottie is easily lead.

Of course Bottie still thinks Microsoft is all about Windows. It isn’t, and hasn’t been for years. Office rules the roost now at Microsoft with Windows Division being an also-ran.

Wayne

13 addicted44 { 02.10.13 at 5:26 pm }

@The Mad Hatter – Office and Dev tools.

What you are saying is obvious from the hugely discounted selling price of Windows. Windows is basically MS’s Kindle at this point.

14 gus2000 { 02.10.13 at 6:36 pm }

The “sold out” meme is targeted toward that faction of the technocrati that still believe in the Market Share Myth. When I bought my first iPhone in 2007, I didn’t care if it sold out, or many other people were using one. It met my needs, and worked well out-of-the-box.

A product that thrives in an ecosystem, complete with a vibrant 3rd-party developer base, needs to hit a critical mass, but the overall share of the market is irrelevant to consumers.

15 tundraboy { 02.11.13 at 8:12 am }

These product fails are just the last convulsions of a dying patient.

Truth is MS never really learned how to develop products that genuinely appeal to consumers. That’s the hidden penalty of being a monopolist. You think your product is the greatest thing since sliced bread when in fact people were buying it because they had no choice. You think your customers are crazy in love with you when in truth most of them tolerate you and some of them hate you for the crap you ram down their throats.

Then what little product design chops they had, it got worse when Ballmer took over the company and ran out the most creative, most dynamic people in the company: The people who don’t want to deal with the political shit and just want to build and sell imaginative new stuff.

I just think of it as karma for their warm corporate embrace of Dubya in 2000. Those A-holes supported a candidate whose politics they abhorred in exchange for a slap on the wrist on their antitrust conviction.

16 jmfree { 02.11.13 at 10:09 am }

Thanks DED, for what I’ll call the CUT — Clarity Until Truth. (As in: “Hey, cut the fud.”)

There is history involved here. Specifically, history invented by a man named Edward Bernays, who just happened to be Sigmund Freud’s nephew. It would be difficult to overstate this man’s influence on our culture, on business practices, and what we see today.

Books on his career are highly recommended, but the Wikipedia entry isn’t bad: http://en.wikipedia.org/wiki/Edward_Bernays.

Bernays also published on his own work, philosophy, and techniques. His most famous title? “PROPAGANDA.” Prepare to have your innocence violated in new and interesting ways. We do not live in a democracy governed by purely rational beings. In fact, we live in a thundering herd. Shocking, I know.

There are too many great stories to tell about Bernays. But one might convey the idea.

In the first half of the 20th century, he was hired by cigarette companies to popularize their brands. One of his techniques was to target high-profile society weddings, almost always held at the largest cathedrals in New York, and “watched” vicariously by almost everyone via the press. Bernays would hire and dress up likely-looking models to stroll up and down in front of the churches smoking one of his brands. Photos and related stories were invariably published, and the models were always assumed to be members of the wedding party and, therefore, “society” women.

Compared to some of the other campaigns he created, that was just a cheap stunt. The man was a “social” genius, in the clinical sense of the word.

What is most amusing today is watching the kiddies of the consumer tech world swaggering about as if they’re immune to this kind of bullshit: bullshit on an enormous, dedicated, and ruthless scale. Let’s see, cigarette companies felt they had a lot at stake. Tech companies? Figure it out from there, people.

And the great irony is seeing the now-predictable reactions of Microsoft-and-other commentards whenever Apple is mentioned in the press: cries of “sheeple” and “morons”.

Another layer of irony while we’re at it: while Microsoft has, throughout its entire existence, proven itself to be a full-time lying machine, I’d say on balance Apple has been far more modest and straightforward to its customers and, at the same time, taken innovative risks that have pushed the entire industry to a kind of Great Leap Forward, and not just for Apple.

But lessons of history: it can be said that Microsoft merely followed in the footsteps of IBM which, for example, actually PAID computer science professors to write disparaging papers about Ethernet in the 1980s. Because, of course, Ethernet was Not Invented Here. (Enlightening interview with Robert Metcalfe at The Register: http://www.theregister.co.uk/2013/02/09/metcalfe_on_ethernet/)

Observing history, I must conclude that it’s ultimately useless to point fingers and be outraged. Better, probably, simply to be on guard, with help from people like our CUTting correspondent here, DED.

Thanks again.

17 MedicineMan { 02.11.13 at 2:33 pm }

Thought I could just post this link. Have no reason to suspect it isn’t true
http://virtualpants.com/post/42690590612/surface-pro-sells-out

18 The Mad Hatter { 02.11.13 at 7:01 pm }

@addicted44

Dev Tools mean nothing to Microsoft now, because they only support Windows, and bring in virtually no profits. If you want to understand what drives Microsoft now, read this article which covers why Microsoft building a Linux version of Office isn’t out of the question.

Short answer – it’s all about the money. Most of the information used in the analysis came from Microsoft’s financial filings.

Wayne

19 spuy767 { 02.24.13 at 2:40 pm }

Invariably, in every article you write, there is one line where I very nearly piss myself. In this particular piece, “Selling out” for Apple is a problem, not a pile of horseshit for its fans to interpret as a Christmas pony waiting for them around the corner. takes the prize.

20 mhikl { 06.05.13 at 6:12 pm }

DED, my eloquent friend, you are my favourite Tech voice and I read a lot of guys: Gruber, All Tech*pinion fellows, Dedu, Martellaro, the rest I can’t spell. Strangely, I can usually tell by the headline when you have reared your head. You tell it like it is, no holds barred. If its brown and stinks, I suspect you’d say the word. It is the true honesty of your convictions and style that intrigues me and may offend or startle the sanitised writer/reader on the plains. Yours is a practice of earlier journalism (with honest research and analyses and a strong dose reality, spiced with fairness) but few have the goolies to practice the honourable prose involving spades in black, shades and white.
I read your work and I am informed, amazed, amused and then aghast that such clarity is lost in journalism, save a few credible sites. Most on The Mac Observer have been whipped into submission by a relentless troll who could argue the devil out of his due. This is happening to other Apple tech sites as they meet the onslaught of hatting nattering nabobs out to defile Apple credulity. Meh!

Question: is there anywhere that you list all your posts from all sites? I am greedy and want to read them all.

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