Microsoft Adds Cash Incentives for iPad Owners to Switch to Surface Tablets

On Friday, September 13, 2013, Computerworld published an article by Greg Keizer, Microsoft kicks off iPad buyback deal in latest effort to juice Surface sales. From the information presented in this article, and the sales promotion published on the Microsoft website, Microsoft’s commitment to capturing a meaningful share of the consumer market for tablet computers should be clear.

But I find worrisome something else about this campaign. If Microsoft needs to gain market share by converting iPad owners to the Surface tablet, then the market size for these devices is far smaller than I would have expected. Why else adopt a method of cannibalizing the installed base to sell more units?

This technique is neither exclusively a Microsoft tool, nor is it only applicable to tablets. This sales tactic has been around for ages. Apple uses a version of it to juice iPhone sales in a two pronged attack. On the one hand, carriers seed their customer base with free iPhone offers. On the other, outlets like BestBuy are also offering a trade in program.

But regardless of who is running a campaign like this one, and for what type of small, smart, mobile device, the obvious conclusion is at least the north American markets for these devices (tablets and high end smart phones) have reached saturation levels. The only way of growing market share amounts to cannibalizing a vulnerable customer base otherwise owned by a competitor.

Undoubtedly, as more analysts reach the same conclusion, the valuation of companies like Apple, Google and even Microsoft, itself, will likely be brought down. But until we reach this point, it’s clear Microsoft will continue to implement this type of tool to “surface” the Surface as legitimate tablet computer in the market.

If nothing else, it is also clear Microsoft is very serious and committed to winning share in this market. Why else would they plan on buying back a competitor’s product? Certainly they have no interest in reselling them.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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