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A Radical Plan For Saving Microsoft's Surface RT
Nerval's Lobster writes "Last week, Microsoft announced that it would take a $900 million write-off on its Surface RT tablets. Although launched with high hopes in the fall of 2012, the sleek devices—which run Windows RT, a version of Windows 8 designed for hardware powered by the mobile-friendly ARM architecture—have suffered from middling sales and fading buzz. But if Microsoft decides to continue with Surface, there's one surefire way to restart its (metaphorical) heart: make it the ultimate bargain. The company's already halfway there, having knocked $150 off the sticker price, but that's not enough. Imagine Microsoft pricing the Surface at a mere pittance, say $50 or $75 — even in this era of cheaper tablets, the devices would fly off the shelves so fast, the sales rate would make the iPad look like the Zune. There's a historical precedent for such a maneuver. In 2011, Hewlett-Packard decided to terminate its TouchPad tablet after a few weeks of poor sales. In a bid to clear its inventory, the company dropped the TouchPad's starting price to $99, which sent people rushing into stores in a way they hadn't when the device was priced at $499. Demand for the suddenly ultra-cheap tablet reached the point that HP needed weeks to fulfill backorders. (Despite that sales spike, HP decided to kill the TouchPad; the margins on $99 obviously didn't work out to everyone's satisfaction.) In the wake of Microsoft announcing that it would take that $900 million write-down on Surface RT, reports surfaced that the company could have as many as six million units sitting around, gathering dust. Whether that figure is accurate—it seems more based on back-of-napkin calculations than anything else—it's almost certainly the case that Microsoft has a lot of unsold Surface RTs in a bunch of warehouses all around the world. Why not clear them out by knocking a couple hundred dollars off the price? It's not as if they're going anywhere, anyway."
That bootloader is locked and won't allow you to disable UEFI Secure Boot or change the keys on it, so Surface RT (the hardware) is still dead to me.
I went to eat some animal crackers and the box said, "Do not eat if seal is broken." I opened the box and sure enough..
HACK THE LOADER.
Ubuntu tablet for $75 USD.
So?
HACK THE LOADER!
"Flyin' in just a sweet place,
Never been known to fail..."
Imagine Microsoft pricing the Surface at a mere pittance, say $50 or $75 â" even in this era of cheaper tablets, the devices would fly off the shelves so fast, the sales rate would make the iPad look like the Zune.
1) And then Apple could sell theirs for $1! :-|
2) MS would be taking a HUGE loss on them. They make OK money at $500. $400 might be break even. I'm pretty sure they don't want to lose $300 or more on each sale. That would lead to...
- raising the price 5-10x on the next release to return to profitability -- which no one would like if they were used to them being so cheap.
- leave them cheap forever, lose money forever.
There's a historical precedent for such a maneuver.
Yeah, it's called a "fire sale", and it's a final grasp at a few bucks, not part of a long-term strategy.
In 2011, Hewlett-Packard decided to terminate its TouchPad tablet after a few weeks of poor sales. In a bid to clear its inventory, the company dropped the TouchPad's starting price to $99, which sent people rushing into stores in a way they hadn't when the device was priced at $499.
Because they were retarded. They could have dropped to $349 and made a LOT more money and still sold every one, but in a much calmer fashion. Believe it or not, there is a sweet spot between "Sell none at $499" and "Sell thousands in hours at $99." It's called "supply and demand" and it's covered in the first 5 minutes of your first economics class.
Despite that sales spike, HP decided to kill the TouchPad...
No, the decision was already made. They decided to leave it dead because a) the CEO that day wanted out of that business and b) there was at least ONE person in the company who realized the million-percent spike in demand was due to the crazy price.
... the margins on $99 obviously didn't work out to everyone's satisfaction.
NO FUCKING SHIT. But that would be totally different with the Surface because... um...
Why not clear them out by knocking a couple hundred dollars off the price? It's not as if they're going anywhere, anyway.
Sure. We might see that. Though MS would want to save more face than HP would -- HP was leaving the business, period, whereas MS still a) sells the OS and b) needs for their to be hardware for that OS to run it on. Whether that hardware is made my MS or someone else, Windows can't be seen as a daed-end brand, like WebOS.
I'm guessing they'll either do incremental lowerings to clear out stock, or one good (but not ridiculous) price drop, like maybe $349. Possible $329 to directly compete on price with the smaller iPad mini. A lot depends on if MS is going to release another Surface RT. If so, it will be a small lowering, a typical "hey, last year's model is cheaper now." If not, it'll drop a bit more to clear them out in a reasonable time, but don't expect HP-like prices.
Dear Slashdot: next time you want to mess with the site, add a rich-text editor for comments.
Agreed, stupid article is extremely stupid. MS can afford to take a writedown on the 360 say, because they know full well they'll make the money back on game sales later on. Selling a tablet at a loss however, doesn't make any sense to anybody. How are they going to make their money back in this scenario? It's not like they can make the OS free-to-play, and then allow 'one run command per 15minutes of grind, or buy this barrel of gems for 20 run commands'.
If you want to make a product that sells in high volume, then you need to make sure that the product is something that the market wants. This is the thing I can't really get my head around with MS at the moment. It's almost like they've replaced market-research with pure-fantasy. Did they not show anyone the metro interface? Didn't anyone mention that it looks like it was designed by a colour blind child with no drawing ability or understanding of aesthetics? Or did they just assume that they could steam roller the world into liking a product that no one wants?
Wow, if that isn't about the shrillest over-reaction to image linking I have ever seen...
What assholes.
The point is to monetize it though. As others have pointed out its not like game consoles. Where you can sell the box cheap, even at loss, because you know you will make money selling titles, and licenses to others to make titles.
The tablet ecosystem isn't like that. Most of the software is third party. Apples App-store has defined the model. Titles sell for a few bucks, mostly and Apple rakes 30% of the top; (playing fast and loose with the details here).
Getting 30% margin on something that has practically no activity cost (Microsoft already does web hosting, so I doubt their store infrastructure costs them much) is nice but you'd need to push a lot app sales getting 30% * $3 to make up for what maybe -$150 margin on the hardware sales. Just to break even you need to sell around 170 apps on average to each user.
Now is the sort of user who chooses an also ran tablet for reasons primarily having to do with price, likey to go out and buy all that many apps? No probably not..
Nor can you try and get developers to charge more. The market has already set the price points for this stuff; the developers know this, they are not going to waste their time writing for or porting to your platform that already is niche compared to the other players when you then insist they charge a price that will make their product unattractive to the few people who actually have your hardware. Not that developers don't want to be able to charge more, but copies sold for $3 is better than no copies sold priced at $15.
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They just assume that they could steam roller the world into liking a product that no one wants. They were told repeatedly during the beta cycle that metro was problematic at best. MS refused to listen because they to have the damn tiles. MS forget that they are no longer in the same space as apple and Google. Not only was it totally unacceptable to Businesses who are their primary clients and purchasers but to the general public. the people who like it are those who would have liked it regardless and are so small in number that its not economically feasable to do so as we all saw.
As for dumping a built unsold product that they have already taken a write off for, any more is better than no money. Sell for $99 would hurt but people would buy them. Unfortunate RTs are a locked ecosystem so they would be still half useless.
Microsoft needs to accept the fact that their code is way to large now but they can't change it either. The windows 7 style is the only way it will sell. (actually had they flips it. Had default to the desktop, turned Metro into a new start bar and allowed the live tiles to be a choice, it would have flown off the shelf. IT is very stavble and has a host of good updates. Its just Metro is in the way. Since surface RT is all metro, that is the cheif problem.