Microsoft Rumored to Exit Tablets: Good News or Bad News?

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Microsoft Corporation (MSFT) wants badly to succeed in the tablet and smartphone markets. But with each passing product launch, there is more worry that the company will never compete with the likes of Apple (AAPL), Samsung (SSNLF), and other high-level competitors.

When the company first revealed its Surface tablet, consumers were excited about the potential for it to compete with the likes of the iPad. And investors were excited about the potential for it to move MSFT stock in a positive direction.

Microsoft MSFT stockSo, what happened? Nothing at all. The Surface has never been able to get on solid ground. Not for a lack of effort, mind you, but simply because the tablet is not up to par with the competition.

Last-Ditch Effort?

Microsoft recently released the Surface Pro 3 tablet, hoping that the device will finally catch on. But with sales remaining weak, there are rumors floating around, backed by supply chain sources, that the company could pull the plug on its lineup of tablets.

Digitimes added the following:

“Lacking a sufficient number of distribution partners, plus high prices, the first- and second-generation Surface tablets are estimated to have created losses of about US$1.7 billion, the sources noted.”

This is nothing more than a rumor at this point, but one that seems to have legs if you consider that MSFT Surface tablets have never been able to achieve much success.

Despite the rumors, Microsoft remains strong in saying that its Surface Pro 3 is performing at a high level. Brian Hall said in an official MSFT blog post:

“Surface Pro 3 is off to a strong start with both individuals and businesses. We understand why: it is a great device for fun but also great for getting things done.”

On one side of things, it is easy to see how Microsoft’s exit from the tablet market could work in its favor. The company could then focus more time, money, and resources on endeavors that have been proven profitable.

On the other side, you have to wonder if Microsoft is really willing to give up on its hardware dreams by just rolling over on the Surface tablets.

For investors, this is a story to keep a close watch on. If Microsoft shuts down its tablet business the company’s stock will surely take a hit. The same holds true if Satya Nadella and crew are able to overcome early struggles and succeed with the Pro 3.

As of this writing, Chris Bibey did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/end-result-microsoft-rumor-go-either-way/.

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