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How Microsoft May Wind Up Being Relevant In Tablets

In Microsoft's fiscal-second quarter, Surface revenue more than doubled from the prior quarter to $893 million, up from $400 million, as revenue for the Devices and Consumer group rose 13% to $11.91 billion.

Admittedly, this is coming off a small base, but it's important to note that Windows-based devices will capture more than a quarter of the market as it becomes mature, and people realize the benefits of 2-in-1 devices, at least according to IDC's Ubrani.

What's hurt the Surface, aside from the fact that Apple essentially reinvented the tablet space in 2010, is the lack of apps available for it, and the confusion surrounding the Microsoft Surface Pro, and the Surface RT, which is a stripped down version of Windows. Apple has said as recently as January 2014 that more than 500,000 native apps are available for the iPad. Microsoft is thought to have in the hundreds.

This doesn't mean that iOS and Android tablets are going to be overtaken anytime soon, though. Last quarter, Apple sold 26 million iPads, thanks in part to strong demand for the iPad Air and iPad mini with Retina Display. Google (GOOG - Get Report) does not break down how many Android-based tablets are sold, but it's generally thought that Android is the leader in market share by operating system.

Must Read: Where to Find a Cheap Apple iPad Air

As the tablet market has matured, the average selling price (ASP) has declined drastically, but IDC notes the decline may be slowing. In 2012, ASPs fell 18.3% from 2011, and in 2013, ASPs dropped another 14.6%. IDC forecasts ASPs to drop just 3.6%, with the reasons being "the growth of higher-priced commercial shipments and a consumer movement away from ultra-low cost products."

--Written by Chris Ciaccia in New York

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