Microsoft's Next Surface May Be Closer Than You Think

So far, Microsoft's  (NASDAQ: MSFT  ) Surface hasn't been a game-changer by any means, although units did hold up nicely coming out of the holiday quarter. The software giant won't officially disclose unit volumes, but IDC estimates that the company shipped 900,000 units in each of the past two quarters.

DIGITIMES is out today with some supply chain rumblings, speculating that Microsoft is preparing to launch second-generation models at its Build Developer Conference that takes place in San Francisco from June 26 to June 28. The company could be trying to steal the spotlight from Apple (NASDAQ: AAPL  ) , whose own Worldwide Developers Conference will occur on June 10 to June 14 at the same venue.

Both companies like to use developer conferences to unveil new product offerings. Apple will undoubtedly show off its new software versions, and may also likely have some hardware announcements in the form of MacBook refreshes. On the tablet front, iPads probably won't be unveiled at WWDC. Surface was revealed at a separate event last June, but the RT model would launch several months later in October alongside Windows 8.

The Taiwanese publication says that suppliers have shipped components for between 1 million and 1.5 million Surface Pro models this year, which is the full-featured variant sporting an Intel processor. DIGITIMES estimates that so far Microsoft has sold a total of 1.5 million Surface units, which includes 1 million Surface RT and 500,000 Surface Pro models.

That's relatively close to the 1.8 million total from IDC's estimates, but well short of the 3 million to 4 million that Microsoft had been targeting. Late last year, The Wall Street Journal said the software giant was targeting 3 million to 5 million. Due to this lackluster performance relative to internal forecasts, Microsoft is reportedly proceeding with a "cautious attitude" for the second-generation models.

The company is keeping most of the same suppliers, and may be looking to reduce the size of the display to 7 inches to 9 inches, which would be down from the current 10.6-inch display found on both Surface RT and Surface Pro.

If Microsoft wants the second-generation Surface to fare better, it should move down the size spectrum and abandon its absurd 16:9 aspect ratio that makes its tablet awkward and unwieldy in portrait usage. Microsoft should also unify Surface around the Intel chips, particularly since this year's Haswell chips will remove any reason for Windows RT to still exist.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.