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Microsoft seeks Surface sales boost by expanding availability

Microsoft has said it will be expanding sales of its Surface Pro and Surface RT tablets through select channel resellers in 17 additional commercial markets in Europe and North America.

In addition to its existing US commercial channel, Microsoft will now sell its Surface tablets through channel partners in Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK.

The expanded business channel availability comes in the wake of sluggish initial sales for Redmond's first run of self-branded tablets. Since launching its Surface tablets, Microsoft has struggled to move the Surface Pro, which runs Windows 8 on an Intel chip, and the Surface RT, which is powered by Nvidia's Tegra 3 and runs an ARM-optimised version of Windows 8 called Windows RT.

The Surface RT in particular has been a disappointment for Microsoft. The software giant slashed prices for its first ARM-based slate last month and wound up taking a $900 million (£576 million) "inventory adjustment" charge associated with the Surface RT in its last fiscal quarter — a move that resulted in a class-action lawsuit filed this week by Microsoft investors accusing the company of hiding poor Surface RT sales.

Microsoft's channel expansion indicates the company is doing everything it can to boost Surface sales and it could also be a sign that Redmond has lost some faith in the ability of its OEM partners to push Windows-based tablets into commercial markets on their own, according to industry analyst Patrick Moorhead.

"Surface has sold very poorly in its current U.S. channels as evidenced by the massive $900-million write-down and deep price cuts. I attribute that primarily to the lack of Windows RT applications and narrow distribution around the holiday selling season," said Moorhead, principal analyst for Moor Insights & Strategy.

"This new commercial channel thrust for Microsoft is significant and really shows their unhappiness with Dell, HP, and Lenovo's efforts in tablets. Commercial markets are really the only place the PC OEMs are making decent margins and Microsoft has just entered their turf, most likely capturing some of the profits," he said.

The Benefits of Windows 8.1

Microsoft said the expansion will coincide with the mid-October release of Windows 8.1, an update to Windows 8 that adds an array of new navigation tips and tutorials designed to help users who had trouble with the sweeping interface overhaul in the first edition of Windows 8, which was released on 26 October last year.

The platform update should make the Surface RT in particular more attractive to business users. The first-generation Surface RT lacked core Windows applications like Microsoft's Outlook email client, which will be made available in the new version of Windows RT, the company said.

Jack Gold, principal analyst for J.Gold Associates, said that with the excess Surface inventory Microsoft is currently carrying, "there is no reason to have limited channels."

"They are hoping that opening the channel wider will mean higher volumes, and perhaps less need, or even no need for further price cuts. However, I'm not sure that simply widening the channel will help sell that many more units," Gold said.

"And this move can't make the OEMs trying to sell Windows tablets very happy. Of course, there are virtually no OEMs selling RT anymore, so it's really about how aggressive Microsoft will compete against the OEMs with Windows Pro systems on the market."