Microsoft plans to expand the number of partners that can distribute its Surface 2-in-1 tablet from a few hundred to somewhere in the thousands, the companyannouncedduring its Worldwide Partner ConferenceMonday. The company is chalking up the need for significant channel expansion to strong demand for the Surface Pro 3, the Surface 3, and the Surface Hub. More importantly, Microsoft anticipates that, on top of this preexisting momentum, demand for these devices will see a significant upswing from the impending release of Windows 10.
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This is a significant uptick at a crucial time. Microsoft had just 20 Surface distributor and reseller partners last fall and, at that time, industry players blamed Microsoft’s limited distributor approach for its failure to break into the enterprise market early in the Surface’s release. Microsoft’s decision to address this shortcoming now is well-timed: While the tablet market as a whole has stagnated over the past few quarters, shipments of 2-in-1 devices, which appeal to the enterprise, are expected to grow, a fact that Microsoft is going to leverage. If past sales figures are any indication, Windows tablet sales will be particularly strengthened by the addition of so many more distributors:
- Microsoft alone shipped more than 2 million Windows tablets in Q4 2014, a quarter in which Windows tablets as a whole — including from Microsoft and other Windows tablets sellers — shipped 6 million units and accounted for 9% of the tablet market.
- Even if shipments of third-party Windows tablets just hold steady, Microsoft-branded tablets such as the Surface product line will see a big lift from such drastic distributor growth.
While these software, hardware, and partnership developments suggest that prospects look good for Microsoft’s tablet line, the company must still win back market share from Apple, which currently holds ~30% of the tablet market (see chart, below). Apple’s hold on the industry will be difficult to loosen, especially because the company is expected to launch its long-rumoured large tablet (unofficially referred to as the iPad Pro) this fall, and the company’s partnership with IBM to make enterprise apps gives it extra appeal to businesses.
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