Microsoft Missed the Small-Tablet Opportunity

Microsoft  displayed its revamped Surface and Surface Pro tablets last week, and overall they're a nice improvement to the first generation. But whether you like them or not, there's one glaring problem with the lineup: There's no small version.

The Redmond-based company didn't just miss out on releasing a so-called Surface Mini, it also missed out on one of the biggest tablet sales seasons of the year.

O Tabletbaum! O Tabletbaum!
The upcoming holiday season is one of the best times for tablet makers to sell their new devices. Microsoft got the timing right by introducing the new Surface 2 lineup in time for holiday shoppers, but Surface Mini rumors have the smaller tablet version launching in the spring of next year -- after prime tablet sales season.

Let's take a quick look at Apple's sales over the past few years to see how important the last calendar quarter of the year is for tablet sales. 

Source: Apple SEC Filings.

While it's no surprise that tablet sales jump during holiday season, the graph shows a good comparison of how much they spike in relation to the previous quarter and how they drop the following quarter each year. Surface 2 sales may be able to benefit from a trend like this going into the holiday season, but a Microsoft Mini is missing out on the lucrative tablet-selling period.

Small tablets are expected to lead the way for tablet sales through this year, according to estimates by DisplaySearch. The research company pointed to Apple's refresh of its iPad Mini next month to help drive the trend. 

Some may argue that it's better for Microsoft to release smaller tablets when fierce holiday competition isn't a factor, while still tapping into small-tablet demand. But let's consider for a moment that Amazon just released new Kindle Fire HDX tablets. The tablet sizes range from 7 inches to 8.9 inches and the upgrades sport a 24/7 customer service video call support, Qualcomm Snapdragon 800 processor, and 11 hours of battery life. With Amazon's updates and Apple's Mini refresh, there may not be many consumers willing to wait for a theoretical Surface Mini in 2014. Though Amazon isn't one of the world's top five tablet vendors, neither is Microsoft. But around this time last year, Amazon's Kindle Fire was the second-best selling tablet after the iPad, and that's something Microsoft should be very concerned about when it enters the small tablet space. 

Get in while the gettin's good
It's no secret Microsoft has had a hard time selling its Surface tablets. With the market trending toward smaller screen sizes, it appears the company has missed not only the right-sized tablets, but also the right time to sell them. While Microsoft could obviously release a small tablet in 2014 in time for next holiday season, I wonder how much of an impact that device will have against an increasingly crowded market that's already dominated by Android and iOS tablets.

Microsoft was late to tablet market, and it appears its small tablet will follow suit. Microsoft investors should evaluate how such a late device -- in a market chock-full of tablets -- can do given demand for Surface tablets is already low. Unfortunately, we'll have to wait a little while longer to get an answer to that question, and time is starting to run out.

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Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and Apple. The Motley Fool owns shares of, Apple, Microsoft, and Qualcomm. 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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