Microsoft Corporation (MSFT): ‘Modest’ Surface Orders

Microsoft Corporation (NASDAQ:MSFT) has moved itself into the tablet space in the last couple weeks with the launch of the Surface tablet, to compete with Nexus by Google Inc (NASDAQ:GOOG), the iPad by Apple Inc (NASDAQ:AAPL) and the Kindle Fire by Amazon.com Inc (NASDAQ:AMZN) – not to mention the partnerships Microsoft has with companies like Samsung, LG, Lenovo, Acer and others who make tablets that run the new Windows 8 operating system.

But while companies like tablet market leader Apple, Microsoft (MSFT) seems to be perfectly happy with its “modest” production numbers. While Microsoft won’t mention their sales numbers publicly – those may be spared until the quarterly earnings report – one report tried to make an educated guess as to how many Surface sales would be considered “modest” – especially when CEO Steve Ballmer says the reception to the new tablet has been “fantastic.”

By looking into some clues from other sources, a Web site report is making the educated guess that Microsoft Corporation (NASDAQ:MSFT) had ordered about 2 million Surface tablets. This information come from the CEO of Pegatron, who said his company was producing about 8 million tablets this quarter, with “the bulk” of them being iPads and Surface tablets. Based on the estimate that Apple (AAPL) will sell 5 million iPads this quarter and the estimate is that Microsoft Corporation (MSFT) will produce 2 million Surfaces.

But comparing that to Apple Inc (AAPL) is a bit misleading. The very first point is by operating system. The Surface is one of several devices in the market that run on the Windows 8 OS, while Apple is the only company that produces tablets than run its own iOS. So does “modest” mean the 2 million Surfaces will be sold, or is there a different number? With the market of tablets out there and the number of competitor companies, do you think 2 million is a modest number of Surfaces? Is it a good number to be worth investing in? How would you see the number if you were in the shoes of billionaire fund manager Seth Klarman of Baupost Group?