In Price War, iPad Mini Thrashes the Surface

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Microsoft’s (NASDAQ:MSFT) Surface tablet is hampered by its high price while Apple’s (NASDAQ:AAPL) iPad mini flies off store shelves, Davenport & Co.’s Drake Johnstone has written in a note to investors.

Johnstone cut his estimates for Microsoft to reflect the lower-than-expected sales of the new tablet in the last quarter. After making retail checks, he now expects sales of 700,000 units, down from an earlier estimate of 2 million.

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“The Best Buy salesman reported strong demand for Apple’s iPad/iPad mini (the stores can’t keep the Mini in stock) and Amazon’s (NASDAQ:AMZN) Kindle Fire Tablets, with just a few people expressing interest in Microsoft’s Surface RT Tablet,” the analyst wrote, according to Barron’s.

“In our view, Microsoft’s Surface RT tablet is far too expensive (basic model retails for $499 or $599, including the detachable keyboard/cover), relative to competitive offerings from Amazon (Kindle Fire 7” tablet retails for $159), Apple (iPad Mini retails for $329), and Google (NASDAQ:GOOG) (Nexus 7” tablet retails for $249).”

This month, Microsoft is expected to launch a new version of the tablet that uses an Intel (NASDAQ:INTC) microprocessor in place of Nvidia’s (NASDAQ:NVDA) chip.

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