In mid-December, Microsoft’s Surface 2 inventory became extremely tight. Now in the post-Christmas period of the month as we move into 2014, Surface 2 inventory continues to be heavily constrained: Microsoft’s own online store remains sold out, Best Buy won’t ship you one of the Windows RT 8.1 devices, on Amazon you can only snag one for around $100 greater than list price, and so forth.
Every Best Buy store near me lists the Surface 2 as unavailable. Only Staples from the online portals I checked claimed to have any stock on hand. So, if you don’t live near a Microsoft Store, you could be out of luck if you want to snag a Surface 2. Naturally, your mileage will vary depending on your location and retailer mix.
Microsoft is in the best bad situation you can be in as the seller of a physical good: When underestimated demand outstrips produced supply. It’s great that your device is in demand, but bad that you don’t have enough to sell. At a moment in which Chromebooks are starting to make waves, Microsoft doesn’t want to cede a single device sale that it doesn’t have to.
As I noted earlier this month, low Surface 2 inventory could hamper Microsoft’s ability to respond to critics unsure of its strategy to become an OEM. The lower its current-quarter Surface revenue is, the less doubt it can clear. And if Microsoft lacks inventory, it can’t sell units, and its revenue number has a ceiling.
According to the Huffington Post, the usual cadre of analysts indicated that they expected Microsoft had reduced its production of the Surface line of devices this year compared to last, and that it had simply run into higher demand. That is the most reasonable answer. Production mishaps could be at play as well, and so forth.
Annoyingly, the best indicator of Surface demand is the precise number being skewed by this shortage: revenue. It would have been far more convenient if Microsoft had very slightly overbuilt Surface units, so that every person who wanted one could have bought one and we would have a full-sales figure for Surface revenue. We won’t get that. So whatever revenue number that is reported will be a percentage of that theoretical maximum. You get to guess what the percentage is.
As we move into the new year, we have to ask when Microsoft can get more inventory online. I did not expect that this many days post Christmas, Microsoft’s Surface inventory would remain this low. You begin to worry that the company has a kink in its supply chain. That or they went far too conservative on their production run, period. Microsoft was not immediately available for comment.
Still, compared to the Great Surface Writedown of 2013, things are far better for Microsoft this time around than last.