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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."
I believe E.T.: The Video Game provides a better example for what Microsoft should do with its surplus Surfaces.
Everything is better with chainsaws.
Illegal, no?
well, dumping what you have is not illegal.
the 900 mil writeoff may well be taking it into account that they would get rid of the stock at price of 150... or whatever.
however here is the point..
"(Despite that sales spike, HP decided to kill the TouchPad; the margins on $99 obviously didn't work out to everyone's satisfaction.)" who the fuck cares if it flies off the shelf for a very limited amount of time? stupid article is stupid and even knows it. make a buttload of loss on every device and make up for it in scale of your inventory..
world was created 5 seconds before this post as it is.
in the hands of resellers who will promptly put them on eBay and Craigslist for $199-$250
isn't that what happened with the majority of the TouchPads that went for $99?
I like microcars
No matter what the materials and other costs per unit, $900M still means a large number of units. There's ways they could use that stock to help keep up their fight for real estate in minds and hearts of users who still consider Microsoft and Windows and Office to be relevant, many of whom probably think the iPad was made by the "Windows people" since they've never seen anything by anyone else. Just imagine if they made a deal to start giving these away with Time-warner or Verizon service. As many home users consider the device and the network to be one thing anyway, they could gain a lot of mindshare that would be lost simply by doing so. Even $200 or more in rental fees from users adding a $10 line item to their bill for it would drop that $900M almost by an order of magnitude. App store purchases would increase overnight, and the remainder of the loss would disappear within a year. There's a lot of creative ways Microsoft could come out of this smelling roses, without "dumping" the stock, and end up better off. Just looking at the numbers you can tell they might be down, but they're not out.
Emacs: for people who just never know when to
Dumping generally refers to a foreign company
'In economics, "dumping" is a kind of predatory pricing, especially in the context of international trade.'
http://en.wikipedia.org/wiki/Dumping_(pricing_policy)
Good-bye
No, it is not illegal to give stuff away. It is only illegal when paired with a monopolist strategy. Example dump cheap tablets until Apple goes out of business. Then raise prices. It is a strategy that only works with competitors with cashflow problems.
In the 90s, Windows and MS Office adoption was driven by de-facto discount/piracy (You could buy a cheap upgrade version to legalize your pirated version). It worked. Office and Windows became the standard.
It's probably the only way a technically inferior product can ever get traction.
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So not only would they take a loss on selling the devices at well below cost, but they have ongoing support/warranty costs. Fulfilling an order has some non-zero cost, so that also has to be deducted from the price of the device as well. They could try selling them without warranty or with a very simple 30 day exchange warranty for defective products, but that could leave them with a PR problem when people run into problems with no way to resolve them and the blogs start filling up with complaints about how Microsoft sucks because they won't stand behind their products.
I really wouldn't be surprised if selling the device for $50 costs MS more than destroying the devices.
MS didn't use the same signing key as they used for the Linux loaders... so the verification always fails.
Now if you find a way to hack the UEFI secure boot loader....
Either Microsoft have done security right for the first time in their very long history of bad security, or it's hackable. I'm guessing the last option is more likely.
Some Linux varient on that hardware might be pretty nice.
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..
HP's approach was monumentally stupid. WebOS was a really nice system (I still prefer the UI on my TouchPad to my TransformerPad Infinity StupidName), but it lacked developers. They were giving them away to developers at the end (which is how I got mine), but then they killed the platform so there was no incentive to write a single line of code for it. I ported Objective-C to work on it, but then gave up on the platform when it became clear that the TouchPad was the last device ever to use it.
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Excuse me... pay attention.
Windows RT. No UEFI key available to the user. No alternative boot. No way to even develop your own non-Metro application.
It renders the Surface RT table a glorified rock... unless you happen to want to run software from Microsof't's app store. Even then... $100 may be overpriced.
That's not the definition of a Loss Leader.
PS: I don't reply to ACs.
There's no "port" involved. Or rather, they already did that. Then they added literally one configuration change to lock out non-MS-signed desktop apps. One change. It's a single flag in the kernel. On x86 and x64 builds of Windows NT, it's not set. On ARM builds of Windows NT (RT and WP8), it is.
Clear that flag (which is what the current "jailbreak" hack for RT does), and you can run any desktop software that will compile for ARM, or any .NET program, or any other language that can be run through one of the others (for example, Java is possible through IKVM, a .NET program implementing a JVM).
Now, as for domain joining, that's actually a simpler problem. All versions of Windows NT have had multiple SKUs (editions) ranging from the do-anything highest-end Server builds to the very crippled Starter builds. It's all the same codebase, just a configuration change. RT falls somewhere between Win8[Home] and Win8Pro SKUs in terms of business-y features; it can use BitLocker encryption (usually not available on Home) but cannot join domains (usually available on anything *except* Home).
Working around that particular restriction is also possible, though it is not easy unless you also remove the signature enforcement ("jailbreak") at which point it becomes nearly trivial.
Oh, and there's already a (very early and still incomplete) x86 emulation layer (actually, dynamic recompilation) for "jailbroken" RT devices. It's slow, as one would expect, but it can run old games and desktop software just fine. It also is the work of a single homebrew developer working from public documentation and reverse engineering for the Windows interoperability (calls to system libraries are thunked to ARM code, which is both faster than using x86 libraries and requires less install space). Microsoft could do a better job easily by putting a few of their people who previously worked in that space (for example, the "Virtual PC for Mac" software worked the same way, some of them are probably still around) on the job.
There's no place I could be, since I've found Serenity...
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?
SecureBoot is no big deal, at least I haven't had too many problems with it. I'm running Linux right now on a 13" Pro Retina, and UEFI wasn't too much of an issue.
Apple laptops don't use secure boot. EFI does not imply secure boot.
Steve and company are looking to get the "iPad halo". They priced at $499 for that very reason: pricing themselves above the iPad would lead everyone to say "why not just get an iPad?". Pricing below the iPad would be a de facto admission that the iPad is "worth more". Microsoft is trying to establish themselves as having a premium product.
This is why you will never see a Surface fire sale: It is an admission that the only reason to buy a Surface in the first place is because it's significantly cheaper than any other first party tablet (and most third party tablets that don't come in boxes with Chinese bullet points).
HP did the fire sale because they were looking to shuffle their inventory, and it was cheaper for them to sell them at a price well below manufacturing cost than it was to landfill them, and they did so because they were looking to get out of the tablet market anyway - they didn't care what it did to the Touchpad brand because the brand itself was headed for the dumpster out back.
Microsoft still wants to sell tablets. Microsoft wants to sell tablets to people who have $500 saved up for an iPad. The logic goes that if they have $500 for an iPad, they have $500 for a Surface. If they sell at $300, well then it's easier to upsell them the keyboard case and still get close to the $500. At $99, even with a keyboard, a copy of Office RT, and a service plan, they're still leaving about half the money on the table, and in doing so, reinforcing the mindset that "A Surface is only worth 1/5 of what an iPad is worth". Sure, it will get Surface units in the home, that will be used for Internet Explorer and Netflix and...basically nothing else. This is great for the customer because it doesn't tap too much into the money they had saved up for the iPad...but they'll never get a Surface2 at $499, "because Surface tablets just aren't worth that much money, otherwise Microsoft wouldn't have sold first gen units for $99", the logic goes.
Microsoft could probably make $901 million by selling those tablets for ($901 million / quantity in inventory) and do better fiscally with the first gen units than by just taking the writeoff. The problem is that the marketing division knows that premium brands never dilute their influence by committing acts of desperation. Microsoft doesn't want to simply gets units in hands, they want units in hands that have already parted with enough money to mirror the margins that Apple makes on their hardware. So long as this is the case, you'll never see a fire sale.
can't recommend it. I have a friend who's looking for a tablet, I can pick up an RT for him for $199. Won't do it, because at some point he's going to want to install some Windows app on it and he'll be pissed at me when he can't. Apple did a good job of marketing the iPad as a fat phone rather than a thin laptop, people get it. MS can't pull that off because nobody has or wants Windows phones, so they don't "get" what the RT is supposed to be. And making two devices called "Surface" that run different OS's isn't helping, nice going geniuses.
Never let a lack of data get in the way of a good rant.
Oh get real. What are the odds of finding a security exploit in the Windows kernel?
Oh get real. What are the odds of finding a security exploit in the Windows kernel?
Yea, it would probably be a lot easier to just buy a couple off a rogue NSA agent.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
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.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
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.
That will only dignify ARM Restricted Boot. There's no reason to let Microsoft (or Apple and friends) allow some architectures to be useful and others to be outright sealed to their hardware; this will just embolden them to make all PCs jailbreak-required. Best to just not purchase RT, and wait for a real ARM alternative.
Also, Ubuntu. So there's 2 reasons I can't support. Sorry.
You can hold down the "B" button for continuous firing.