He estimates Microsoft sold just 1 million Surface RT tablets, down from his previous estimate of 2 million.
For some context, Apple is expected to have sold well over 20 million iPads. That's part of the problem. People are choosing iPads over Surfaces, says Thill. He also blames narrow distribution. Microsoft only sold the Surface at its stores last quarter.
He's cautiously optimistic about the Surface line. He thinks the Surface Pro which runs on an Intel chip will be strong with corporations, providing a good iPad alternative.
Overall, Thill says he's cutting estimates for Microsoft's holiday quarter based on bad data points about the holiday quarter:
Cutting FQ2 by $1.1B/$0.08 to $21.3B/$0.76 (Street $21.7B/$0.76) on lower Windows division revs to $5.9B (from $6.7B) on CQ4 PC sales -6.4% per IDC and our revised Surface RT sales e.stimate of 1M units (prior 2M). PCs also hit MBD transactional revs cutting MBD to $5.6B from $5.9B. With PC weakness likely to linger we cut FQ3 to $21.0B/$0.76 from $21.5B/$0.78 (Street $20.9B/$0.78). FY13 est’s cut to $79.6B/$2.80 (revs +8.0%, margins 36.6%) from $80.8B/$2.90.