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Microsoft ups Surface production, to sell in more stores

Sales staff demonstrate the Microsoft Surface during the opening of Microsoft's retail store in New York's Times Square October 25, 2012. RE
Sales staff demonstrate the Microsoft Surface during the opening of Microsoft's retail store in New York's Times Square October 25, 2012. RE

SEATTLE (Reuters) - Microsoft Corp has stepped up manufacturing of the Surface tablet, its new device designed to counter Apple Inc's iPad, and will introduce it to third-party retailers this week.

The moves suggest Microsoft is seeing some demand for its first own-brand computer in the crucial holiday shopping season, although it has yet to divulge any sales figures.

"The public reaction to Surface has been exciting to see," said Panos Panay, general manager of Microsoft's Surface project, which forms part of the company's Windows unit.

"We've increased production and are expanding the ways in which customers can interact with, experience and purchase Surface," said Panay, but gave no details of how many extra units were being produced.

Panay did not mention names of retailers that will sell the Surface, but separately office equipment retailer Staples Inc said it would stock the tablet from Wednesday.

He said the Surface would also be on sale at retailers in Australia from mid-December, with more countries to follow in the next few months.

Since launch in late October, the Surface has only been sold by Microsoft itself, in its own brick and mortar stores in the United States and Canada and online in Australia, China, France, the UK and Germany.

The only Surface model available now - officially called Surface with Windows RT - runs a version of Windows created to work on the low-power chips designed by ARM Holdings, which dominate smartphones and tablets but are incompatible with old Windows applications.

It starts at $499 for the 32 gigabyte version plus $120 for a thin cover that doubles as a keyboard.

A larger, heavier tablet - called Surface with Windows 8 Pro - will be introduced in January, running on an Intel Corp chip that works with all Microsoft's Windows and Office applications. Microsoft plans to price the new Surface from $899 for a 64 gigabyte version.

The world's largest software company also said it would keep its chain of 'pop-up' holiday stores open into the new year and will convert them into permanent retail outlets or what it called "specialty store locations".

Microsoft's recent push into physical retail - following Apple's great success - has resulted in 31 permanent stores plus 34 holiday ‘pop-up' stores in the U.S. and Canada.

If Microsoft converted each of the temporary stores into permanent outlets it would have 65 stores, still well below Apple with almost 400 worldwide.

(Reporting by Bill Rigby in Seattle, Sruthi Ramakrishnan in Bangalore)

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