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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."

34 of 251 comments (clear)

  1. Marketing expenses by bonch · · Score: 5, Insightful

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

    1. Re:Marketing expenses by jd2112 · · Score: 4, Interesting

      Hollywood accounting?

      It would be Hollywood accounting if they had sold 20 million units in the last quarter but still managed to loose billions of dollars.

      --
      Any insufficiently advanced magic is indistinguishable from technology.
    2. Re:Marketing expenses by AlphaWolf_HK · · Score: 4, Insightful

      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.

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    3. Re:Marketing expenses by Jason+Earl · · Score: 4, Insightful

      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.

    4. Re:Marketing expenses by fahrbot-bot · · Score: 3, Insightful

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

      I'm sure all those commercials showing people dancing (or finger painting) with their tablets were way more expensive to produce than ones showing people doing actual work -- if that's even possible -- on the tablets would have been. To be fair, I think the Surface/Windows8 commercials are entertaining and well done, but they don't inspire me to actually want/buy the products.

      --
      It must have been something you assimilated. . . .
    5. Re:Marketing expenses by Anonymous Coward · · Score: 4, Funny

      I hate it when the dollars get loose

  2. sick of windows at work by SkunkPussy · · Score: 3, Interesting

    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?

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    SURELY NOT!!!!!
    1. Re:sick of windows at work by Kenja · · Score: 4, Insightful

      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.

      --

      "Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
    2. Re:sick of windows at work by Anonymous Coward · · Score: 4, Insightful

      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.

    3. Re:sick of windows at work by Penguinisto · · Score: 5, Insightful

      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.

      --
      Quo usque tandem abutere, Nimbus, patientia nostra?
    4. Re:sick of windows at work by Kenja · · Score: 4, Insightful

      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.

      --

      "Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
    5. Re:sick of windows at work by mwvdlee · · Score: 5, Insightful

      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?

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    6. Re:sick of windows at work by h4rr4r · · Score: 3, Insightful

      The last such platform?
      So no other UNIXes still exist?
      There are other POSIX compliant desktops available on the market not made by Apple?

    7. Re:sick of windows at work by sjames · · Score: 4, Insightful

      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?).

    8. Re:sick of windows at work by jedidiah · · Score: 3, Informative

      > The walled garden has yet to reach the Apple desktop, which is still a POSIX compliant UNIX

      MacOS is a proprietary GUI based user environment with it's own history, culture, and expectations quite different and distinct from Unix.

      Only a vanishingly small minority of MacOS users care or even know that their shiny happy thing is a Unix underneath.

      Apple is as much a Unix vendor as Tivo is.

      --
      A Pirate and a Puritan look the same on a balance sheet.
    9. Re:sick of windows at work by Penguinisto · · Score: 4, Informative

      You need to update your propaganda. Apple no longer has the lead in tablet market share.

      Has nothing to do with propaganda, or even who has the lead. However, it has everything to do with why the Surface RT failed utterly. The UI is confusing and ugly, and the flexibility (read: app support) is simply not there. Battery life is a big question mark, and half the internal storage ("disk") space on the low-end model is eaten by stuff that the consumer sees no use for (the recovery partition, the bloated-as-hell OS, etc.)

      Replace "iPad" with "Android" if it makes your phallus turgid - machts nichts, my point still stands. Th3e RT sucks because it fails to meet the requirements I outlined up there.

      If you can prove me wrong, please do so.

      --
      Quo usque tandem abutere, Nimbus, patientia nostra?
    10. Re: sick of windows at work by peragrin · · Score: 4, Insightful

      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

      --
      i thought once I was found, but it was only a dream.
  3. Microsoft went in the wrong direction by GoodNewsJimDotCom · · Score: 4, Insightful
    1. Re:Microsoft went in the wrong direction by Anonymous Coward · · Score: 5, Insightful

      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.

    2. Re:Microsoft went in the wrong direction by jd2112 · · Score: 4, Funny

      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.

      I avoided the Surface because I'm not coordinated enough to do the dance moves they show on the TV commercials.

      --
      Any insufficiently advanced magic is indistinguishable from technology.
  4. Microsoft... by khr · · Score: 3, Funny

    Microsoft... There's a name you don't hear every day... They're still around?

  5. Failed Marketing by bradgoodman · · Score: 4, Interesting
    Really?!??!

    All those ads with people dancing around snapping covers on and off - opening and closing weren't enough to evangelize the masses as to the virtues of the technology?!?

    As much as I hate Microsoft - it's sad to say - that the [very, very] few people who I know who actually had a Surface had nothing but RAVE reviews about them. The summary was: "Size/weight of an iPad - but with a real keyboard. I could take it to meetings, and actually run Word, Excel, PowerPoint, and Outlook. I could actually take notes with the keyboard - and not some "add-on" iPad type keyboard which made the iPad as big and bulky as a small laptop or netbook".

    So in short - it was a real "productivity" device - not like tablet, which I still don't think is really good for anything but *light* web browsing and watching movies on a screen, the size of what we used to watch them on in the 70's.

  6. Beats the crap out of XBOX sales by Overzeetop · · Score: 5, Insightful

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

    --
    Is it just my observation, or are there way too many stupid people in the world?
    1. Re:Beats the crap out of XBOX sales by idobi · · Score: 3, Informative

      Historically, the Xbox division is still not profitable. It's net -$3B from 2001

    2. Re:Beats the crap out of XBOX sales by rahvin112 · · Score: 3, Informative

      They will never ever make money on the XBOX, by the time they start making money on the console it's time to replace the console with a newer version, and that's after they dragged the refresh cycle out 3 years longer than the previous cycles.

      If I was a shareholder I would be livid, that money could have been put into share purchases or dividends for far more return to the owners.

  7. I admit it, I was taken in by the early hype by Presto+Vivace · · Score: 5, Insightful

    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.

  8. The Surface is Wonderful! by roc97007 · · Score: 4, Funny

    The Surface is a wonderful device that I love to use. My seventeen kids all fight over the privilege to use it and they all want to replace their iPads with a Surface. They're just flying off the shelves, and the local stores can't keep them in stock. I have to drive 200 miles to buy more. At work our productivity increased 1,022% when we replaced all of our ipad and android tablets with the Surface. It's so cute and convenient, I just can't keep my hands off of it.

    There, did it for you. Cut and paste as necessary.

    --
    Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
  9. Re:RT more than Pro? by CohibaVancouver · · Score: 3, Informative

    The Pro version isn't selling at all.

    It's a pity, because I've got a Pro and it's a pretty kickass machine. I agree the RT doesn't make sense, but the Pro is well thought out.

  10. No the Surface simply has crap sales. by tuppe666 · · Score: 4, Informative

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

    Except the early Xbox sales where great. From a 2001 article http://uk.gamespot.com/news/microsoft-reports-strong-xbox-sales-2829778 "Xbox sold out as soon as we launched, and we're selling systems as fast as we can produce them. More than 100,000 units a week are being delivered to retailers, so game players are likely to find Xbox systems throughout the holiday season. With one of the best launch lineups ever, I understand why Xbox is the most sought-after gift for the holiday." "

    Not sure why people are trying to rewrite history.

  11. One mans treasure is another mans' trash by JamesA · · Score: 3, Funny

    Jeff Atwood (of CodingHorror, StackOverflow fame) praised the Surface RT:

    I can't even remember the last time I was this excited about a computer.

  12. Re:Wasn't that expected? by unimacs · · Score: 5, Interesting

    Microsoft's view was that the iPad and similar Android tablets were fine for media consumption but were really lacking when it came to creating. Having a physical keyboard without adding significant weight or bulk was a killer feature in their mind.

    A lot of people felt that Microsoft did an excellent job in designing the keyboard. A key point they missed though is that once you stick a keyboard on a tablet like that there's not much distinction between it and a small laptop. So why not just get a laptop?

    One of the nice things about a tablet is that you don't need an flat surface available in order to use it. Microsoft's own Surface commercials show a bunch of people sitting around a table. A tablet that requires a desk in order to take advantage of one its key features isn't going to set the world on fire.

  13. Re:LOL you think so? by cayenne8 · · Score: 3, Insightful

    If you're in the bathroom long enough to even need reading materials, something is very wrong.

    Seriously?

    From my experiences, and talking with friends, we ALL pretty much refer to the toilet as "the Library"...we all catch up on our reading while sitting on the can.

    I figured it was just a guy thing, since most women I know have no clue why myself and my other male friends keep an assortment of reading material in the bathroom.

    Don't get me wrong, it isn't being irregular or constipated, just that it does take more than 30 seconds to sit and shit...so, might as well catch up on reading while in there. And for so many of my married friends, it is a good opportunity for a little me time from the wife, as that that is the one place and time they won't try to follow them around.

    :)

    --
    Light travels faster than sound. This is why some people appear bright until you hear them speak.........
  14. I have had them all by Spiked_Three · · Score: 3, Insightful

    And they all 100% suck.

    Apple locks you in - you do what Apple allows and forces, including some of the crappiest written software ever imagined (iTunes). That also forces you to pollute your desktop PC with more crap (iTunes).

    Android & Apple hideous development environments. Seriously, yes they can do anything, so can machine language code written in hex, that is not the point. The point is Apple runs this proprietary disgusting mix of object oriented and non-object oriented legacy crap. Android uses a semi decent language (potentially) but surrounds it with a hideous never considered anything but command line crap they call a UI. It depends on a buggy, poorly designed open source IDE

    Microsoft has a decent language, the best UI in existence, and arguably the best IDE, but you cant run anything but Internet explorer, you cant deploy it conveniently to your own machine, and certainly not to anyone else's. It's a 'me too' clone with all the bad parts and none of the good parts.

    They let the people worried about money get in the way of making a good product, and the result is failure (serves them right).

    Gates made MS at a time when he ignored the bean counters and made Windows despite OS/2, to be better, not more profitable. The profit comes automatically. When you force profit in over being a good product, the surface is what you end up with. R.I.P. MS, the good you will be missed.

    --
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  15. Easy - just unlock the bootloader. by ron_ivi · · Score: 4, Interesting
    Main reason I won't get one is that when (not if) RT dies; all you have left is a paperweight.

    At least with laptops, I can stick Linux on them when their version of windows gets too bogged down with viruses.