Microsoft Is Sitting On Six Million Unsold Surface Tablets

DavidGilbert99 writes "Microsoft took everyone by surprise last year with the Surface tablet. It was something completely new from the company everyone knew as a software company. However nine months later and the sheen has worn off the Surface tablet and Microsoft's financial results on Thursday revealed it has taken a $900 million write down on the Surface RT tablets, leading David Gilbert in IBTimes to estimate it is sitting on a stockpile of six million unsold tablets."

Comments

Bury

[k31bang]

I think i know an area in New Mexico where they can bury them. With good electronic company.

Re:Bury

[jtownatpunk.net]

I had exactly the same thought but I was gonna say something like, "Those E.T. carts are gonna have some company soon."

Re:Bury

[GigaplexNZ]

a) Give away inventory for free at schools etc
b) Bury/dispose of inventory, user base purchases competitors products instead

I know which option I'd be going with.

Re:Bury

[ArsenneLupin]

Maybe they are afraid of
step 1) Give away inventory for free at schools etc
step 2) Schools find a way to root devices and install Linux (Android, ...) on them

Re:Bury

[Anonymous Coward]

If Ballmer's been sitting on them and squirting his Zune, they'll need to go to a hazardous waste facility for sure.

Re:Bury

[DrXym]

c) give them to developers.

Developers can be total whores when it comes to snagging some free shit.

Re:Bury

[Joce640k]

Luckily for us they designed their latest desktop operating system around that huge pile of landfill.

Re:Bury

[RabidReindeer]

I had exactly the same thought but I was gonna say something like, "Those E.T. carts are gonna have some company soon."

All the better that Microsoft has such fantastic experience with phoning home (or at least to the NSA).

NSA: "We've found a HUGE terrorist cell in Mexico!"

Re:Bury

[FireFury03]

What exactly would be illegal ?

AFAIK all the Microsoft ARM devices have mandatory secureboot. Cracking it would likely be a violation of the DMCA.

Re:Bury

[Entropius]

No, I think you mean:

c) give them to developers developers developers developers developers developers developers developers developers developers developers.

Re:Bury

[Anonymous Coward]

We are talking about Surface RT tablets. Not Surface Pros. A long time IT pro should recognize the difference.

Re:Bury

[radiumsoup]

pfft, you think I read the article?

Ha!

Re:Bury

[hairyfeet]

Actually Pac-Man was a miracle of programming and should be seen as such. Look up the history of the 2600, it was designed in 1975-1976 and its main function was built around 2 squares and a sprite, aka Pong and games based on Pong. Pac-Man was released in 1980, more than 4 years in a time when progress was making incredible leaps and bounds every year and on top of that its running on custom hardware, again FOUR YEARS ahead of the 2600.

The fact that they were not only able to get a rough approximation of that game to run on that hardware, but to keep most of the core gameplay intact? It was a fucking miracle and the guy who wrote it frankly ought to be in a programmer hall of fame. Everybody talks about the ghost flickers but do you know WHY the ghosts flickered? because the hardware wasn't even capable of drawing more than one ghost and the character on screen at the same time so the guy drew straight to the screen during refreshes to get more than one ghost on the screen!

Imagine getting a bottom of the line Intel Atom netbook to run a 4 player Borderlands 2 session at full speed and even THAT isn't as hard as what this guy did because at least the Atom did have SOME graphics focus during design, by comparison the 2600 was already cut down from its already not cutting edge hardware to save costs! Hell the thing didn't even have a frame buffer, so give the man some credit, he got a game running cutting edge hardware to work on a system LONG past its prime and not even designed to run that type of game at all, the equivalent of getting Doom II to run on a 1980s Nintendo game watch.

How can that be?

[I'm New Around Here]

With those cool commercials showing people spinning these around, and snapping keyboards onto them with such gusto. Certainly the choreography should have guaranteed these things get snapped up in masses.

It can't be that people are finally paying attention, and ignoring fluff. So what gives?

Re:How can that be?

[gl4ss]

With those cool commercials showing people spinning these around, and snapping keyboards onto them with such gusto. Certainly the choreography should have guaranteed these things get snapped up in masses.

It can't be that people are finally paying attention, and ignoring fluff. So what gives?

just last week some guys were claiming that they're selling faster than they can produce them... I think they based that on the fact that stores have shortages of them, I guess the real reason is the stores refusing to stock them because they don't sell and they knew there was going to be a price slash.

Re:How can that be?

[gl4ss]

read the article..

MS should have given a warning about the poor sales. it's nearly stock fraud now, they knew few weeks ago and yet they continued to act like they sold ok, 900 million hit is nothing to sneeze at...

Re:How can that be?

[TheRaven64]

I played a bit with a Surface (we have a good relationship with MSR, so lots of people with them are floating around the place) and it seems like a pretty nice device. The problem is not that it's bad, it's that it doesn't really have any compelling advantages. There are several things it seemed to do a bit more cleanly than iOS or Android, but nothing that it did a lot better, and if you want to write code for it you're limited to quite a restrictive environment (which probably doesn't matter to non-geeks, but it will have a knock-on effect on the availability of software).

Re:How can that be?

[David Gerard]

Same problem as Windows Phone. I know a few people with Windows phones and they love them ... the only thing they lament is the utter lack of apps.

Unfortunately, it seems that "Microsoft" and "Windows" are tainted brands. No-one wants to spend personal money to be reminded of Monday morning 9am at work.

Re:How can that be?

[FireFury03]

Same problem as Windows Phone. I know a few people with Windows phones and they love them ... the only thing they lament is the utter lack of apps.

Unfortunately, it seems that "Microsoft" and "Windows" are tainted brands. No-one wants to spend personal money to be reminded of Monday morning 9am at work.

It seems to me that there's nothing _wrong_ with Windows RT - if they had got there first, it may well have been adopted in the same way as the iPad. The problem is, it doesn't really do anything that iOS and Android devices don't already do, so why would people go for a non-mainstream device with the associated lack of support from apps and OS updates?

Add to that the fact that MS chose to set the price point right up there with the iPads - for whatever reason, people will pay Apple's inflated price tag just to get the Apple brand. If they're not interested in brand then they will be comparing on features and price, and Android wins on price grounds hand's down. No one is ever going to pay over the odds to get the MS brand - they never have, and they aren't going to start now.

If MS had priced it down at the Android levels then they might've picked up a portion of the people who don't care about brand, but as it is they decided they wanted to place themselves as a premium brand and priced themselves out of that market.

The *only* reason I can think why someone would specifically want an MS device is because they want something that will integrate into their corporate network, with group policies and stuff... and MS specifically ripped that out of Windows RT in order to push people onto their heavy Windows 8 tablets (which are frequently too heavy compared to the other tablets).

Re:How can that be?

[jeffmflanagan]

There really is something wrong with Windows RT. It's a Windows 8 look-alike, called Windows, but it can't actually run Windows apps. We understand that x86 Windows apps can't work on ARM, but Joe Consumer doesn't. They should have called it something other than Windows, but instead they muddled their product-line by trying to ride on the Windows brand. If they called their ARM tablet OS "Surface" instead of Windows, they could have avoided a lot of confusion.

Seriously?

[mwvdlee]

Microsoft took everyone by surprise last year with the Surface tablet. It was something completely new from the company everyone knew as a software company

Seriously?
It took you by surprise that they too finally released a tablet? Perhaps it was surprising it ran on a version of their own OS?
From a company that's been selling game consoles, keyboards, mice and other hardware for years?

Re:Seriously?

[tftp]

It was actually surprising - not in the good sense, though. It was surprising that MS decided to enter a cutthroat market that is dominated by dirt cheap hardware made in China and an excellent free OS (Android) or a nearly free OS (Apple.) It was surprising that it chose to compete against MILLIONS of applications written for those two OSes. It was surprising that it decided to release a tablet that carries the name "Windows" [RT] but doesn't run Windows software. It was surprising that MS expected to actually win some place under the Sun in this market.

But of course why would they get any share of the market if they haven't delivered anything new, anything unique that would be worth of jumping the safe and sound ship of iOS/Android? What is it that lures the customer toward WinRT? I do not know, and I'm somewhat aware of what's happening with computing devices. As far as I know, there is nothing new in WinRT, except the fact that it is devoid of applications (compared to the competition.) What they have, is rumored to be largely garbage. I can't check those rumors because I don't know anyone who'd have WinRT. Everyone these days runs with iOS or Android, and they are happy campers.

MS is a million pound giant who is attempting to walk on thin ice. But whatever they do, they cannot get enough traction (=profit) to sustain their humongous empire, where one LOC of change costs a million dollars, after everything is said and done and all the uninvolved parties are paid. They cannot survive on low calorie food. They grew their business on products that they were the sole supplier, and they dictated their prices - hundreds, sometimes thousands of dollars for a copy of software that is sold in millions. This tablet market does not have such a profit margin. MS wants for their OS more than the whole competitor's tablet costs! And if they charge less then they are shipping money with every unit sold.

Re:Seriously?

[rvw]

Albert Einstein wrote, “Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.”

I was not surprised. Microsoft has had the same problems in the online world. Bing was never such a success as Google. Hotmail was a huge success, when they bought it, and it has been until Gmail came along. The problems is that they simply don't have the culture to create really groundbreaking new technology. In the 80s and 90s they were smart and quick, first in the market, cheaper than Apple, smarter than IBM. Now everyone is big, has piles of money, has its own business that makes a profit. Microsoft is like IBM. They can focus on Apple and Google because they are hip and make more money, but following them is stupid. They are climbing that tree right now, and they are failing.

Windows (but not WP) and Office, SQL Server and Exchange and more of their business software - why isn't that enough? Will they fail if they fail online in the private sector? Will they fail if they don't have an OS on tablets and phones? I don't say they should forget about phones and tables, but they should join Apple and Google and Tizen, and deliver software for business on those platforms. Good solid software, that simply works, that's based on Exchange and whatever else they have.

Re:Seriously?

[antifoidulus]

Not to mention they failed business 101, when entering a (nearly) saturated market you sure as hell better be cheaper than your already established competitor, especially when people's biggest complaint about the ipad isn't the multi-tasking, it isn't the lack of external storage, it's the price. Pricing your tablet that has an obviously relatively under-developed eco-system the same as your biggest competitor who already has an established user and dev base was beyond stupid. Had Microsoft priced the entry level at $399 or even $449 right from the start they might not have had such a spectacular failure on their hands. As it stands, most people willing to drop $500 on a tablet go with an ipad, those looking for something cheaper and/or more flexible go with Android.... Leaving Windows with the very small market share of people willing to shell out for an ipad, but not wanting one for some reason.

Yes, and before I get flamed about said reasons, most people aren't geeks, and the ipad customer satisfaction surveys tend to show that the vast majority of people who are willing to shell out for an ipad are happy with it, leaving MS with an incredibly tiny potential market.

Release the secure boot key...

[kazade84]

Then I'll buy one, I could do with a tablet to run Fedora :)

Re:Release the secure boot key...

[DrJimbo]

So, you can't run Linux on it.

No wonder it's not selling.

Lessons not learned.

[jcr]

Microsoft had already tried and failed to sell tablet computing for about a decade before Apple showed them how to do it right. Their response was to double down with yet another attempt to shoehorn windows into a role it never fit.

-jcr

Sitting On Six Million Unsold Surface tablets

[Chrisq]

Microsoft Is Sitting On Six Million Unsold Surface Tablets

I guess Balmer threw all the chairs out.

Sounds like

[Anonymous Coward]

Sounds like 900 million more reasons to get rid of Ballmer...

Re:My guess is Win 8

[YukariHirai]

Everyone got their chance to see Win 8 in action and saw what a pile of crap that was. Why would they buy it on a tablet?

Maybe because that's the only platform where the Metro interface makes a lick of sense.

My, how times change

[PapayaSF]

15 years ago it was common to question whether Apple could survive in the face of the Windows monopoly. Heck, the joke was that their official name was "Beleaguered Apple Computer," because it seemed like every news article referred to them that way. Then they had a string of hits: the iMac, OS X, the iPod, the iTunes Store, the iPhone, the MacBook Air, and the iPad. Microsoft seems to be totally on the defensive, with flops like the Zune and PlaysForSure and now Surface tablets. They are hanging on in the enterprise, and I suppose the Xbox might be making them some money after billions were invested, but that's about it. A year or so ago Apple began making more money from the iPhone alone than Microsoft makes from everything they do put together. Microsoft seems like yesterday's news. How the mighty have fallen.

I liked the thing

[maynard]

I've never been a fan of Microsoft's business practices, or the Windows platform. But I like Office, particularly Word. Always have, going back to Word for Mac 6. Please don't tell me to write in emacs and process through LaTeX. I've done it and know that nobody but a few physics journals is going to accept a .tex file. Also, it's a PITA when it comes to formatting. And no, I don't want a wysiwyg TeX editor either.

Anyway, I was intrigued by the possibility of running Word on a tablet and went to a store to check one of these Surface Tablets out. I liked it. The keyboard is responsive, the browser good enough to use, and a beta of Office looked useful. But the price tag and lack of apps is a killer. I just couldn't justify it.

So, like many of their manufactured goods, MS has but out a decent product only to be hampered by a truly idiotic marketing and sales plan. It's like they thought they'd sell these overpriced things on brand recognition alone, forgetting that people actually need to use the thing for something before they'll plunk cash down. Including Office was a good first step. But it's not an app market.

Jeesh. The decline of Microsoft has been this slow motion avalanche of stupid. The firm really needs to cull management and stomp out what must be ongoing interdepartmental wars over policy and prestige. Then focus.

Booting Balmer would be a good first step, IMO.

Re:I liked the thing

[hankwang]

Also, Word works reasonably well. For example, right now I have a nearly 80,000 word document that it handles well enough

Strange; where I am sitting, I hear of and see endless numbers of problems with Word with my colleagues: Word crashing on or garbling documents with too many floating figures, equations that suddenly turn into un-editable bitmapped images, documents full of "Error reference not found" (try remembering exactly what you wanted to refer to a month ago...), "save as PDF" generating pages with a gray toner-wasting background.

Why not give them away....

[drginge]

...or sell them at a stupidly low price? Why "sit" on a stockpile of rapidly depreciating tech? If the price were less than half the price of an iPad they would sell easily. What Microsoft need just now is market penetration. With enough users the apps and accessories will sell, and then the developers will come once there's sufficient volume to make actual money, and THEN they can think about profiting off the NEXT generation, but for now they need to admit this one is a bust and almost give them away. Currently an iPad is what £350.....the Surface tablet would have to be at £100 to tempt me....

Re:Why not give them away....

[mythix]

That's what happened with the win7 phones, they sold them dirt cheap after all the early adopters bought them for full price.
Now all the early adopters will never by a moble windows product again, including the surface.

I bought a lumia, for more then 400 euros, and 2 weeks later they:
- told me it would not be able to upgrade to win 8
- slashed the price in half, if not more

now why on earth would I go and buy another product with a microsoft label again? right, I wouldn't, I didn't and I'm pretty sure I won't for quite some time...

Re:progress(?)

[jtownatpunk.net]

Actually, Microsoft was on phones long before Apple. It was called PocketPC in 2000. Switched to Windows Mobile in 2003. Then Windows Phone in 2010. They had around 40% market share in 2007. Which is when the iPhone came out. I had WinMo phones back in the day. That was the phone to get if you wanted apps, the ability to run a cellular data WiFi router, etc.

The iPhone was Apple's response to MS, RIM, and Palm. Not the other way around. And their response crushed the competition.

Re:progress(?)

[erth64net]

So true. I remember my 1st M$ phone. It was crap: crashed multiple times during a day, and the battery life was absolutely terrible (and this was with a stock/no-apps install). It would actually restart in the middle of phone calls!

Been an iPhone user since day one - best decision ever.

Yep

[Sycraft-fu]

I have no problem with Metro on a touch screen. I think it works as well as anything else I've used, better than the stock Android UI. Turns out those big tiles are really nice when you are batting at things with big, imprecise fingers. You don't want to try and operate the Windows desktop UI in touch, it doesn't work well. There are old tablets that do just that (people forget there have been Windows tablets since the XP days) and they are painful to use without a pen. Your fingers just aren't precise enough for the desktop UI.

So makes good sense on a tablet. The issue is trying to ram it in to a desktop OS. There is doesn't make sense. You have a nice precise mouse to use. It just takes up space and occludes your work. With a mouse and keyboard, it is a bad interface.

What they should have done (not that it would have helped the surface, there's no tablet market, there's an iPad market) it had the Metro UI for Windows RT, and not for Windows 8. Windows 8 should then have been able to run Metro programs in a resizable window. That way the tablet is usable, the desktop is usable, and it can run tablet programs, if needed.

In fact, turns out 8 is real nice when you do just that. You pick up Stardock's Start 8, which gives you a start menu instead of start screen, and Modern Mix, which takes Metro apps and puts them in a window instead of full screen. It works really great then.

The problem isn't with the UI, it is with where it is used.

Re:The thing is

[Anonymous Coward]

I don't know about that... People keep saying what a "fashion device" iPads are, but have you actually seen how people actually use them?

My experience:

I actually have many tablets (I'm a developer, so that's my excuse...) and here's my uses for them

iPad 3:
- Often kept in the kitchen to watch TV on while cooking (Optimum app is one of rare useful things that a cable company gives out!)
- Used for reading "large format" color stuff (ie. Comics)
- Sitting around browsing the web when I have no real desire/need to actually "interact" with the world... just read about it.
- Note taking from time to time when I'm too lazy to get my laptop.
- Video chatting with parents

iPad Mini
- Primary reading device (at least every night before bed. Kindle app set to white on black text w/ backlight and contrast way down to offset light-in-the-eyes effect.)
- Light gaming (mostly things like card games, although the occasional larger game)
- The occasional use at the gym to watch something I've pulled down from either iTunes, Tivo or BT

My wife's iPad 2, which she uses for..
- Everything. Of course, she's not much of a "power user", but basically it's her primary portal to Facebook, Twitter, all those things normal people do on a computer. She also has a MB Air 11" which (with a wirelessly connected external drive) she manages her photos, does her normal work on, etc. Most of the time it just sits here gathering dust, though.)

My parent's, my Wife's parent's iPad 2.
- Facetime and Maps. We generally video chat with either set of parents with the kids a few times a month. They love it, the kids love. It's a massive win. In addition, when I was traveling a lot last year (India, Europe) I was able to video chat with my folks every few days. Trying to get either parent set to setup Skype just Wasn't Happening (and we tried!) but Facetime "just worked" enough for them to get it. Hell, my 80+ year old mom, who's completely computer-phobic, can actually make and answer FT calls. Oh, and Maps and Weather. My dad, father-in-law both spend a really long time with both maps and weather apps. I have no idea why. I guess it's an old man thing.

I also have 3 other computers (MB Air, MB Pro and random PC Tower.) The MB Air is my "sitting on the couch" laptop when I just need to write stuff up. the Pro plugged into 2 27" displays for "actual work" and the PC for... gathering dust. I have a wide variety of phone-class devices which I switch around to (like I said, I'm a mobile-focused developer.) At the moment, I'm using a Galaxy S4.

Finally, I have a Nexus 7. When I discovered that I really liked the iPad Mini (smaller, lighter, easier to lug around vs. iPad normal) I thought the Nexus would be even better (smaller, better display) but I just can't get comfortable using it. I have no way of explaining why, other than to just call it... too clunky. I gave it to my dad to see if he'd like to use it instead of his 2nd gen Kindle or iPad 2, but he didn't like it either, so now it's just gathering dust until I need to do some dev/testing on it. I'll probably end up giving it to my sister-in-law who's still using a old Motorolla Xoom I gave her (a device -she- uses quite a bit, too, mostly for the same web-browsing, Facebooking stuff that my wife uses her iPad for.)

So as perhaps you can see there are use cases for all of these device that maybe -you- don't have, but others have and enjoy using these types of devices for filling those needs. Each and every time a device listed above is used in the manner described, it's in a way that using a regular laptop/computer, while certainly feasible, just wouldn't be as a good experience as using the tablet. Fashion device? The tablets all mentioned above almost never leave the house, so if we got them to be "cool" for other people to see, then they're massively poor at it. They are, however, massively useful for what we use them for. I don't mean to be derogatory, however your comment (and it's certainly a popular one around here) seems very much like "I don't understand it, therefore I will make fun of those who use what I don't understand."

They're not all bad

[Phydeaux314]

Disclaimer: I purchased a Surface Pro for personal/school use.

The RT was, quite frankly, a bad idea.

The pro has a lot going for it, if you're in the market for a moderately high-powered x86 ultrabook with a stylus and touch screen. Basically, it's the cat's pajamas for people that need something exactly like that (I do audio recording and some graphic design work when I'm out and about), and it's an overpriced novelty for anyone that doesn't. No remorse here, I love the thing, but I know I'm not a typical end user and there aren't enough people like me to support the kind of R&D that goes into this sort of device.

The RT takes all of the advantages the pro has, and throws them out the window.

You're left with an underpowered, oversized tablet with an underwhelming user interface and no applications to speak of. It's pretty much the perfect storm of uselessness. Which makes it no real big surprise that it's selling badly.

At least with the pro they can sell it to the developer/designer folks (my sister, who does photoshop work on a regular basis, was drooling all over it) instead. The RT? Not so much.

I spent a bit of time trying to talk with Sinofsky

[AdmV0rl0n]

By talk, obviiously, that ends up more 'argue'.

During the 'talk' it became apparent that Sinofsky quite believed that I no longer needed a file manager, and that it was OK to both break my current work mode, and provide a new broken work mode, and provide a windows machine that would not run windows software, nor would it be able to be added to a domain. I mean, what can be better than if I create local users I have to work through two UIs and process methods to do what happened under local users previously.

Its quite compounded when you even now try to have conversations.
"I run engineering for the core group in the os division. Let’s talk about the things you have issues with. Winrt & domain join is the big one, right? Usability for desktop users – I am guessing on non touch machines is the second. I am happy to talk about either of these."

I've turned that 'offer' down now - because quite frankly there comes a time when a vendor *actually* needs to be listening and stop talking. And 'I am happy to talk about either of these' is in the end insane. Noboady at MS should be 'happy' to talk about these. When they start being as 'unhappy' as I am and they start to actually get a clue, then I may start talking.

I think it was fairly clear to anyone sensible that RT (The system and the API), Surface, and Notro and other aspects were wrong, still are wrong, and are not going to stop being wrong because someone in marketing things they can be made 'right'.

I will admit a perverse pleasure in some basic historically proven events. Sinofsky being fired. Deserved for attitude alone, but partially a shame as he can deliver something - that somthing has to be right however. And seeing his utter failing in both 8 and with Surface after he spent so much time bullshitting about 'how great they are'.

98% of windows stuff happens on the real windows systems. Even in 8, that translates back to people running desktop and installing back a start menu, and running their standard legacy software.

I've tested 8.1 and the fundamentals remain utterly broken. The window dressing of 'fixing' what was wrong isn't whats required to fix the problems.

Re:BING = Ballmer Is Not Good.

[peragrin]

I love Ballmer, if anyone is going to permantly bury Microsoft it will be Ballmer. I say let Ballmer stay until he is forced out by the shareholders revolting and then Icann can show him how to properly strip mine a company of anything useful.