Early Surface Sales Pitiful

Nerval's Lobster writes "Microsoft has earned $853 million from sales of its Surface tablets, according to the company's annual Form 10-K filed with the SEC. That's a bit of a disaster, to put it bluntly. Earlier estimates put Surface sales at roughly 1.5 million units; the $853 million figure reinforces that projection. By comparison, Apple sold 14.6 million iPads in its last quarter alone. Adding insult to injury, Microsoft spent quite a bit producing and marketing Surface. The Windows division's 'cost of revenue increased $1.8 billion, reflecting a $1.6 billion increase in product costs associated with Surface and Windows 8, including a charge for Surface RT inventory adjustments of approximately $900 million,' read the Form 10-K. 'Sales and marketing expenses increased $1.0 billion or 34 percent, reflecting an $898 million increase in advertising costs associated primarily with Windows 8 and Surface.' Overall, Microsoft's Windows division earned $19.2 billion in its fiscal 2013."

Comments

Marketing expenses

[bonch]

In other words, Microsoft spent more money on advertising the Surface than they took in selling it.

Re:Marketing expenses

[AlphaWolf_HK]

Another thing to consider is that revenue isn't profit. Revenue doesn't include, for example, the cost of the tablet itself that was sold in each transaction, but rather how much they sold the tablet for.

I imagine that after R&D and physical hardware costs, they're probably operating at a pretty deep loss on Surface. I'm curious if that is both Surface Pro and RT or just the RT though.

Re:Marketing expenses

[Jason Earl]

Yes, and how is that working for them? At this point it is hard to tell whether Surface of Windows 8 was the bigger fiasco.

Microsoft went in the wrong direction

[GoodNewsJimDotCom]

I remember a time when Microsoft had a larger vision for surface.

Re:Microsoft went in the wrong direction

[Anonymous Coward]

The problem with the Surface RT was that it was best described by what it couldn't do.

"It's like iPad, but it doesn't run apps from the Apple store."
"It's like a Windows PC, but it doesn't run all Windows software."
"It's like a laptop, but you can't type on it in your lap.

Microsoft completely fucked up the marketing. If Surface RT came out three years ago, it would have dominated, but Apple and Android have already shaped user expectations. They created a device that runs a browser and MS Office...enough to cover 99% of computing use...and it has twice the battery life, half the weight, and a third of the cost of an comparable ultraportable laptop. It should have been a killer piece of gear, and the engineers probably thought they created something really special. Too bad Microsoft thought it would just sell itself in market where existing tablets had already gone the content-comsumption only route.

Re:sick of windows at work

[Kenja]

The walled garden has yet to reach the Apple desktop, which is still a POSIX compliant UNIX environment complete with X-Window (as an optional install) and BASH that can run off the shelf commercial software. It is in fact the last such platform on the market.

Re:sick of windows at work

[Anonymous Coward]

Is the fundamental issue that people are sick of using shitty computers with shitty locked down versions of windows all day at work, so they don't want more of the same bullshit for their personal devices?

No, the problem is an inexplicable tablet interface on the new desktop OS and a tablet which seemed to be sold on the idea that it does absolutely everything that the laptop which you already have does in exactly the same way, not to mention it running that bizarre new interface people keep muttering about because it's apparently terrible.

Re:sick of windows at work

[Penguinisto]

Yes and No.

Joe Sixpack** doesn't give a damn about the lock-in per se (see also the iPad). They want something that has flexibility, durability and (apparent) speed packed into an easy-for-them-to-grok mobile interface. A pretty UI/graphics package is also a must. Note that the iPad does all of that - it doesn't come with an instruction manual, yet most non-techie folks can pick it up for the first time and do what they consider to be useful stuff with it in less than five minutes.

Surface RT OTOH? Pure fail in this department.

** sample size = one spouse, all my relatives, and a handful of non-tech friends. Your own mileage may vary.

Beats the crap out of XBOX sales

[Overzeetop]

Remember when the early XBOX sales looks so bad they thought it might drag Microsoft under?

I admit it, I was taken in by the early hype

[Presto Vivace]

I took one look at the intro video and was blown away, I thought that Surface was as cool as dammit. But then I assumed that it would be priced at Microsoft prices. Instead they tried to sell it at Apple prices. Had they, from the get go, offered iPad coolness at a Windows price, I think they might have made a go of it.

Re:sick of windows at work

[Kenja]

Well their vision is "the same interface on all devices". The problem is, we as consumers dont want that. A phone interface does not work well on a desktop. That, and it's ugly.

Re:sick of windows at work

[mwvdlee]

The fundamental issue is that people already have a choice of multiple shitty locked down tablets, for which they can get far more applications for just about the same price or less.

What reason does anybody have to buy a SurfaceRT?

Re:sick of windows at work

[sjames]

In Microsoft's vision of the world, an electric drill would need a gas pedal, a gear selector, a brake, an ignition key, and a steering wheel because consistent interfaces are important (who cares if you can actually use it?).

Re: sick of windows at work

[peragrin]

Windows 8 may have the same interface on all devices the problem windows RT is simpler

Windows RT is windows that can not run Windows Programs.

It was doomed to fail for that reason. Apple might be swapping parts of the UI back and forth across devices for consistency. But apple never said IOS was OS XI