Do You Really Think Microsoft's Growth Hinges on its Surface?

Here we go again. A couple of weeks ago I discussed the rampant, unsubstantiated rumors surrounding Microsoft's Surface sales, both good and bad. Surface was obviously selling beyond expectations; hence, the recent announcement from Microsoft sharing its plans to ramp up production, make permanent several of its temporary holiday retail outlets, and ship Surface tablets to several electronic retailers.

But there's been examples of how poorly Surface was selling -- just check out your nearest tech blog. Of course, that's old news now (a couple of weeks, at least), so let's explore the latest information detailing the demise of Microsoft's entry into the world of mobile computing.

The latest data
According to Foxnews.com, the data clearly shows Surface is getting "trampled' on the retail scene. The results, if you can call them that, are based on phone conversations by an R.W. Baird analyst with store representatives from Best Buy and Staples. To reinforce the dial-up research, there's also a "tweet analysis" conducted over the holidays.

According to the research, at Best Buy the Surface "was not recommended to us by reps without us asking about it specifically." Apple's iPad was the most recommended tablet, along with Amazon.com's Kindle Fire, and Google's Nexus 10.

It was also pointed out that the Microsoft Surface was available at both retail outlets; that can't be good. With data like that, it's safe to assume the death of the Surface is imminent, right?

Let's look at this from a slightly different angle. Retail reps pushing iPads, Samsung tablets, Kindle Fires, or even Google's Nexus, should surprise absolutely no one. Microsoft just recently shipped its Surface to the two retail outlets included in the "research," as opposed to tablet alternatives that have been in stores for months. Which do you think the reps are more familiar with? So, which do you think they're going to recommend?

Another consideration -- Microsoft Surface has been on the market for just two months. Does anyone, anywhere, really expect any new entry in the mobile computing sweepstakes to unseat Apple, Samsung, Amazon.com, or Google by year's end?

Here's the thing
Much like Google, Microsoft has a few things going for it as it works at making a dent in the hardware market. Namely, Microsoft has numerous, alternative revenue lines giving it time for new products to gain traction. Cloud computing, enterprise offerings and, of course, its new Windows 8 OS, sets Microsoft apart from its new, and old, competitors.

In many ways, IBM remains one of Microsoft's key competitors, and its not exactly noted for its mobile computing prowess. While the focus centers on the recent "research" surrounding its Surface tablet sales, Microsoft continues to crank out new, software-related products and services. One of its latest, Microsoft Office 365, is a cloud-based solution targeting businesses of all sizes. Though its often considered a solution for small and medium-sized companies, Office 365 has Toyota as a client.

If you're considering Microsoft as a near-term investment based on surpassing Surface tablet sales goals, you're likely to be disappointed. The mobile computing market is too competitive, and with Apple, Samsung, Amazon.com, and Google already in the game, Microsoft needs time, as do investors. A bet on Microsoft is a lot more than a bet on its Surface tablet -- which is either going well, or just may be the end of Microsoft as we know it (yeah, right).

Neglecting to account for its Xbox sales, enterprise and cloud solutions, business services, and its new operating system, sells Microsoft short -- just as investors have done for much of 2012. Focusing on the most recent rumors of Microsoft's Surface sales is actually good news for value investors.

At just over eight times future earnings, Microsoft remains a fantastic value in an industry poised for growth in 2013. Add in a 3.45% dividend yield, and Microsoft has a lot more to offer investors than a tablet.

It's been a frustrating path for Microsoft investors in 2012, who've watched the company fail to capitalize on the incredible growth of mobile over the past decade. However, the company is now trying to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that, while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

The article Do You Really Think Microsoft's Growth Hinges on its Surface? originally appeared on Fool.com.

Fool contributor Tim Brugger has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, International Business Machines, Microsoft, and Staples. Motley Fool newsletter services recommend Apple, Amazon.com, Google, International Business Machines, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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