When Microsoft launched its first All-in-one PC, the Surface Studio, the market as well as the media were impressed. But the starting price point of $2,999 was a little less digestible, considering the average price of a reasonably specced PC is about half that.
However, despite the pricing hurdle and the fact that this was considered to be a niche product, Microsoft has done exceedingly well in terms of sales.
Over the quarter that Surface Studio was released, Microsoft expected to ship no more than 15,000 units. But the demand was so strong that they may have actually shipped double that number of Surface Studio PCs. This information came from Microsoft’s Taiwanese components suppliers via DigiTimes, who also said that Microsoft has asked for another shipment of 30,000 units for the first quarter of 2017.
Assuming steady demand, 120,000 units of Surface Studio will be shipped in the first year after launch. Not a bad number, but not anywhere close to the 3.5 to 4 million units that the iMac line from Apple ships. To be fair, though, Apple has been making personal computers for no less than three decades, while Microsoft only started three months ago.
That said, the demand for all-in-one PCs is getting softer, and there’s no indication that things will turn around on that front.
So, how is Microsoft able to show strong sales soon after launching Surface Studio?
The answer to that is two-fold.
The first reason is that, despite everyone calling this a niche product, that niche is actually quite big. Consider the various use cases for such a PC: graphic design, architectural design, engineering, fashion design, 3D design, game design, media publication, photography and videography, book design, advertising…the list is practically endless.
The second reason why Surface Studio is seeing strong numbers is that it is made by Microsoft. At least in the consumer’s mind, there’s a big difference between a Windows 10 PC made by an OEM and one made by the company that provides the operating system and much of the key software for the product. It could be a behavioral decision rather than a practical one, but a powerful decision nonetheless.
There are other reasons as well. Microsoft can better tweak their hardware to leverage the full power of Windows 10, they can add new hardware components as they develop more capabilities within Windows 10, and controlling both hardware and software aspects of a product gives them several other advantages.
The real reason Microsoft will do well in the PC space with Surface Studio and future refresh products is that it controls the world’s PC operating system market. If you think about it, the logic behind that argument is very similar to why Google Pixel will do exceedingly well for Alphabet, and why iPhone has taken Apple to the top of the smartphone market. Alphabet already controls the mobile OS market, and Apple, too, controls both the hardware and software sides of its business.
That control over the hardware side of things is what Microsoft is trying to attain with its Surface line of products. Surface products – especially the mobile devices – aren’t going to become Microsoft’s bread and butter overnight, but they will provide a strong base for the company to pursue its Continuum agenda. Simultaneously, Surface Studio and its successors in the PC segment will help Microsoft leverage the dominance they already enjoy in desktop operating systems.
So, despite the downturn in the PC market and the high price of Surface Studio, we believe that market demand will stay strong enough to allow it to grow its sales organically for several years to come.
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