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Microsoft Now Makes Money From Surface Line, Q1 Sales Reach Almost $1 Billion

Posted by timothy on from the but-that's-just-on-the-surface dept.

SmartAboutThings writes Microsoft has recently published its Q1 fiscal 2015 earnings report, disclosing that it has made $4.5 billion in net income on $23.20 billion in revenue. According to the report, revenue has increased by $4.67 billion, compared to $18.53 billion from the same period last year. However, net income has decreased 14 percent compared to last year's $5.24 billion mainly because of the $1.14 billion cost associated with the integration and restructuring expenses related to the Nokia acquisition.

But what's finally good news for the company is that the Surface gross margin was positive this quarter, which means the company finally starts making money on Surface sales. Microsoft didn't yet reveal Surface sales, but we know that Surface revenue was $908 million this quarter, up a massive 127 percent from the $400 million this time last year. However, if we assume that the average spent amount on the purchase of this year's Surface Pro 3 was around $1000, then we have less than 1 million units sold, which isn't that impressive, but it's a good start.

117 comments

  1. Did they make money on Surface? by Anonymous Coward · · Score: 4, Interesting

    A positive "gross margin" (revenue - direct costs > 0) sounds like a nice way of saying that they made a loss (revenue - direct costs - indirect costs < 0).

    1. Re: Did they make money on Surface? by Gadget_Guy · · Score: 3, Insightful

      If you are totalling the revenue for Surface and subtracting the direct costs for Surface, why would you then include the indirect costs that are by definition not specifically for the Surface? It sounds to me like you are desperately searching for bad news here.

    2. Re: Did they make money on Surface? by tomhath · · Score: 2

      It's correct to account for both direct and indirect costs. Gross Margin, Operating Income, and EBITA don't mean all that much; if they're negative you have a real problem, but if they're positive you can still be losing your shirt.

    3. Re: Did they make money on Surface? by dimeglio · · Score: 2

      Well it's about time they make money. Still going to take a while to recover all the loses of previous models. I expect it's not going to last long with all the cheaper equivalents popping out of Asia. I expect Surface is really a short term stint until OEMs catch-up.

      --
      Views expressed do not necessarily reflect those of the author.
    4. Re:Did they make money on Surface? by jrumney · · Score: 1

      Even more so when you consider the question of how many of those 1 million units, were "sold" to their marketing division to give away to NFL and others for promotional purposes.

    5. Re: Did they make money on Surface? by davester666 · · Score: 2

      not really. for example, they are spending a crazy amount of money advertising the Surface 3, like the NFL deal, lots of ads on TV, custom displays inside a bunch of retail displays, nevermind the cost of the Microsoft "stores". if you throw these expenses in, it's still a Zune.

      Selling less than a million of these things in basically the first full quarter they are available, after more than 2 years of the 'Surface' platform being available, is not that positive, particularly given how much Microsoft has flogged them, and how well competing devices [particularly the iPad] sells.

      --
      Sleep your way to a whiter smile...date a dentist!
    6. Re: Did they make money on Surface? by _xeno_ · · Score: 4, Informative

      I'm not sure the Surface Pro line is really competing with the iPad, though. I mean, according to Microsoft themselves, a Surface Pro 3 is equivalent to a MacBook Air.

      (Disclaimer: I own a Surface Pro 3. They're probably right to compare it to the MacBook Air and not the iPad. I know everyone hates the "tablet UI" on the desktop but even with the Surface Pro 3 their tablet UI is still pretty terrible. I pretty much never leave the desktop. On my tablet. The few tablet-style apps I've tried for the Surface has all been terrible. It really does make a descent small Windows laptop, though!)

      --
      You are in a maze of twisty little relative jumps, all alike.
    7. Re: Did they make money on Surface? by PopeRatzo · · Score: 4, Funny

      Of course he's looking for bad news. Have you read the comments for any Slashdot article that mentions the Surface or Surface Pro? A brigade of people come out who are basically upset that it even exists. It's like the Surface Pro scared their mothers when they were in the womb.

      --
      You are welcome on my lawn.
    8. Re: Did they make money on Surface? by PopeRatzo · · Score: 5, Interesting

      I own a Surface Pro 2 and a Surface Pro 3, and use them for portable music production, live performance and field recording. They are by far the best system for such use. It's a tablet, with the touch screen (or stylus) except it can run a full version of ProTools with all the plug-ins and VSTi's you could possibly want. Full USB connectivity for audio interfaces, MIDI controllers and peripherals.

      If they made a Macbook with a removable touchscreen, it would be close, but Apple seems more intent on having every pixel in the world. I remember when Apple really catered to musicians (except for their slow adoption of audio driver standards). Now, they cater to people watching cat videos. At the moment, there is no device close to the Surface Pro for this purpose. I don't believe this niche is enough to sustain the Surface Pro by itself, but I'm glad to have them right now. And I hope someone else out there is paying attention, which is why I post a comment just like this every time the Surface comes up on Slashdot.

      Not that there's anything wrong with cat videos.

      --
      You are welcome on my lawn.
    9. Re: Did they make money on Surface? by SeaFox · · Score: 1

      I'm not sure the Surface Pro line is really competing with the iPad, though. I mean, according to Microsoft themselves, a Surface Pro 3 is equivalent to a MacBook Air.

      It's more a matter of what people are really buying a Surface Pro in place of. Not what the marketroids at Microsoft want to claim.
      People buying a Surface and not a laptop -- only if they weren't really set on a laptop to start with.

    10. Re:Did they make money on Surface? by Anonymous Coward · · Score: 1

      In broad terms it looks like more than half were "sold" down that pathway. It isn't clear how long they could keep that up.

      I'm aware of customers where Microsoft offered thousands of surfaces for free, and threw in millions of dollars of development time to port software from iPad , and customers still knocked them back.

    11. Re: Did they make money on Surface? by PopeRatzo · · Score: 4, Funny

      "It's all about ethics in Slashdot comments!"

      --
      You are welcome on my lawn.
    12. Re: Did they make money on Surface? by davester666 · · Score: 0

      Yes, now they target the Surface as competing against a completely dissimilar device, the MacBook Air, because when it first came out, they marketed it directly against the iPad, and it was COMPLETELY crushed.

      Basically, they have to sell it as a laptop that you can remove the keyboard, instead of a tablet.

      --
      Sleep your way to a whiter smile...date a dentist!
    13. Re: Did they make money on Surface? by Paradise+Pete · · Score: 2
      By indirect costs he means cost of sales. Costs that are specifically for the Surface. That's marketing, advertising, development, incentives, inventory, etc.

      Having a positive gross margin is trivial. That just means you were able to sell for more than the cost of building it. Not exactly exciting news.

    14. Re: Did they make money on Surface? by Sun · · Score: 2

      If you are totalling the revenue for Surface and subtracting the direct costs for Surface, why would you then include the indirect costs that are by definition not specifically for the Surface?

      No, that's not a correct statement. The indirect costs may not be specifically for a specific Surface unit, but the Surface division does have indirect costs that are specifically its own costs. This means that there are, indeed, indirect costs that are specifically Surface's.

      The Surface factory pays rent, taxes, electricity and utility. These are all indirect costs, and they are all specifically for Surface.

      What's more, the number of units sold is crucial. If you only sold a million units and the gross profit per unit is $5 (and it is, likely, less), then it doesn't take the indirect expenses to be particularly high for the division to be running at a net loss.

      Shachar

    15. Re: Did they make money on Surface? by _xeno_ · · Score: 3, Informative

      Honestly, that's because that's what it is. It makes a much better competitor to the MacBook Air than the iPad. (The price point doesn't help it either.) It makes a fairly lousy tablet, and it suffers from the general Windows 8-ism of "throw absolutely everything we can think of into it at once."

      It's a multi-touch tablet. With an optional-but-not-really keyboard-touchpad cover. And a front and rear camera. And a pen that doesn't attach anywhere. (Fun game: in Surface ads, watch for them to produce and disappear the pen. It comes out of nowhere and disappears to nowhere.)

      It runs a laptop OS (and runs it well, mind you) and therefore picks up some annoying laptop-isms: by default, unlocking requires your Windows password. (You can, thankfully, enable a PIN to unlock.) Like a laptop, it enters hibernation mode and then requires a couple of seconds to wake up if you leave it alone long enough. It also takes a couple of seconds to wake up from sleep (not hibernation).

      As a small form-factor laptop, it works quite well. As a tablet - well, Windows 8.1 turns out to make a lousy tablet OS.

      Although I find that using touch on desktop apps works surprisingly well. The handwriting support is also fairly good and you can get away with using just the pen in a surprising number of desktop apps.

      It honestly isn't a bad whatever it is. It's just that it isn't really a good tablet.

      --
      You are in a maze of twisty little relative jumps, all alike.
    16. Re:Did they make money on Surface? by Anonymous Coward · · Score: 0

      Most likely, they have been channel stuffing and the losses will be diverted to indirect costs.

    17. Re:Did they make money on Surface? by Hognoxious · · Score: 1

      I agree, it looks like doowylloh accounting.

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    18. Re: Did they make money on Surface? by Gadget_Guy · · Score: 1

      The Surface factory pays rent, taxes, electricity and utility. These are all indirect costs, and they are all specifically for Surface.

      Does Microsoft own the factory, or do they outsource to a separate company? If they outsource then those indirect costs would already be passed on as a direct cost to Microsoft.

    19. Re: Did they make money on Surface? by spongman · · Score: 5, Interesting

      of course, anyone who ever said anything nice about a Microsoft product is a shill...

    20. Re: Did they make money on Surface? by rahvin112 · · Score: 1

      It's entirely possible and common for gross margin to be positive but to still be losing money on it. Gross margin hasn't had SG&A costs subtracted yet, that includes advertising and all the administrative charges (labor) for producing the tables.

      Given the heavy advertising budget for Surface I would be surprised if it's profitable even if gross margin is positive. Because gross margin subtracts outside costs, such as contract manufacturing a positive gross margin means at least the the revenue for the surface is at least enough to cover the cost of constructing the hardware and shipping it to market even if there is no net profit. That is undoubtedly a good sign that the market will respond to but until there is a net profit on the sales I wouldn't be claiming the battle is won and the Surface is a success. It's primarily sending the signal that they are at least selling enough surface that they aren't going to be losing hundreds of millions on unsold inventory.

    21. Re: Did they make money on Surface? by Anonymous Coward · · Score: 1, Interesting

      of course, anyone who ever said anything nice about a Microsoft product is a shill...

      Mostly yes; There are a number of MS products which kind of work and are useful (e.g. Windows 7) there are a number which don't really work but you have to use (Excel - often you need to use it because it's broken the same way as the software your accountant uses). There are some products that are so subsidised (like surface discussed here where they are just casually willing to write off the dev costs) that they become quite competitive if you can put up with their quirks (a tablet line with nothing you can use with one hand!). There are very few products that anyone could get "enthusiastic" about.

      What Microsoft does well is getting IT people trained up to believe in their stuff. Many of the "shills" don't even realise they are that. They work for small IT companies where the only training they get is MS subsidised. They go through tests where you have to spout MS propaganda to pass ("Q) What is kerberos? A) An old incompatible prototype for Active Directory missing features needed for compatibility"; "Q) who invented the proper Operating System / A) Bill Gates" and then their earning power depends on their ability to spout MS propaganda.

      Once a company starts sponsoring PR agencies to shill on the internet, anyone who is helping them, even without knowing it, becomes unethical and complicit, at least negligently, in lying.

    22. Re: Did they make money on Surface? by SuricouRaven · · Score: 2

      I think that's the idea. Microsoft has no desire to be a hardware manufacturer. The surface is a market-starter and technology-demonstrater - the plan is that Microsoft will invest the money and take the risk to open the new market for Windows tablets, but the real aim is in the classic business model of providing the software and services for hardware someone else builds.

    23. Re: Did they make money on Surface? by ranton · · Score: 4, Insightful

      of course, anyone who ever said anything nice about a Microsoft product is a shill...

      Mostly yes; There are a number of MS products which kind of work and are useful (e.g. Windows 7) there are a number which don't really work but you have to use (Excel - often you need to use it because it's broken the same way as the software your accountant uses).

      How is Excel on your list of "don't really work" apps? Excel is essentially Microsoft's killer app, and it isn't because you can't convert XLS documents to work with other competitors. It is because Excel is one of the best applications ever written (IMHO). My attempt to get used to the Apple operating system (I got a Macbook for work) was mostly successful but I eventually fell back to Windows because their version of Excel was so much better than the Mac version (not Apple's fault, but still important). There were some other minor reasons, such as me liking Notepad++ more than Sublime and my opinion that Windows 7 handles multiple large monitors better, but Excel was the main reason. I also like Visual Studio for most development, but IntelliJ was good enough. The alternatives to Excel were not good enough however.

      Once a company starts sponsoring PR agencies to shill on the internet, anyone who is helping them, even without knowing it, becomes unethical and complicit, at least negligently, in lying.

      People advocating for products they find useful is not lying. Opinions will always be biased, mostly because it is so hard to become such an expert in multiple product ecosystems that you can objectively compare them, but that doesn't make all opinions completely invalid. Most marketing is underhanded and manipulative, so if outrage over heavy handed marketing makes consumer advocacy unethical then all consumer advocacy would be unethical.

      --
      -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
    24. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      Wait, so you're saying Surface isn't good for watching cat videos?

    25. Re: Did they make money on Surface? by Anonymous Coward · · Score: 3, Insightful

      Of course he's looking for bad news. Have you read the comments for any Slashdot article that mentions the Surface or Surface Pro? A brigade of people come out who are basically upset that it even exists. It's like the Surface Pro scared their mothers when they were in the womb.

      As a self-confessed Surface hater, I can at least give some insight for the reasons behind it:
      1. The hardware is locked to Windows. My understanding is that the newer Pro versions aren't locked, but that's despite MS's efforts otherwise
      2. It's an attempt at validating the Windows 8 tablet UI which is almost universally disliked around here
      3. MS deliberately tried to confuse users with the x86 and ARM versions in order to strong arm developers into targeting their tablet interface and publishing their apps in the Windows app store

      The Surface Pro didn't scare my mother when I was in the womb, but it does represent a threat to open computing, and I for one would be happy to see it fail. Unfortunately that doesn't seem to be the case any more, so I guess we're in this for the long run.

    26. Re: Did they make money on Surface? by Kjella · · Score: 3, Interesting

      No, that's not a correct statement. The indirect costs may not be specifically for a specific Surface unit, but the Surface division does have indirect costs that are specifically its own costs. This means that there are, indeed, indirect costs that are specifically Surface's. The Surface factory pays rent, taxes, electricity and utility. These are all indirect costs, and they are all specifically for Surface.

      And parts of the general overhead should also reasonably be allocated to that line, if you run a Surface ad that should probably be specific indirect cost but if you have a stand at a conference promoting all your products then a fraction of that cost should probably be considered Surface marketing costs. All companies do some form of internal cost assignment that is more detailed than what the official accounting practices gives you but since they're easy to manipulate they won't show them to investors as you could easily be sued over giving a false impression of the profitability of one particular product or service.

      What's worse when it comes to investment decisions is that even if the costs are properly allocated - a very big topic in itself, particular for example what costs employee time, equipment time, equipment wear, storage or use of consumables instead of direct expenses - is that cutting one product line won't necessarily cut the allocated costs. A textbook example is a chicken farm where you sell chickens breasts, legs and wings. Even if you find out the wings aren't profitable through the cost allocation, it's pretty hard to make chickens with no wings so dropping the product wouldn't actually cut the costs, just force a re-allocation.

      Another fun part of this is the impact dropping some products or services can have on others, for example say you run a grocery store and find that selling milk is really making you no money all, in fact you're losing a bit. But if you tried to cut milk from the store, you'd find a lot of customers start shopping elsewhere. It's amazing how many companies have fallen into this trap by cutting auxiliary non-profitable products only to find they were necessary to make the profitable sales. Or in other areas like public transportation, if they cut the off-hour lines people buy a car and use that instead of the bus altogether.

      It's not all bean counting 101, like in tech there actually are complex interrelations in business too. Most of it isn't rocket science but if you use too simplistic models it might fall flat on its face in reality. The GAAP figures they publish for the stock market are not made for detail, they're made for being correct and comparable which highly limit their depth because they don't want to give companies the degrees of freedom to manipulate the numbers. Trying to accurately say how a small product is really doing in a big company's books is actually very, very hard.

      --
      Live today, because you never know what tomorrow brings
    27. Re: Did they make money on Surface? by squiggleslash · · Score: 1

      This is another typical misrepresentation by the Surface Pro Justice Warriors: we are so NOT about being upset about the Surface Pro existing, no, what we're concerned about are ethics in gaming journalism.

      --
      You are not alone. This is not normal. None of this is normal.
    28. Re: Did they make money on Surface? by PopeRatzo · · Score: 1

      A MacBook Air or MacBook Pro running Logic Pro X is what I see most musicians using in the field.

      Take another look. Seriously.

      --
      You are welcome on my lawn.
    29. Re: Did they make money on Surface? by PopeRatzo · · Score: 1

      It really isn't. It has something to do with codecs or driver layers or something. I finally had to break down and buy an iPad Mini for cat videos and to snort coke off of.

      --
      You are welcome on my lawn.
    30. Re: Did they make money on Surface? by nukenerd · · Score: 1
      AC wrote :-

      Wait, so you're saying Surface isn't good for watching cat videos?

      No, he is saying that Surface is excellent for cat videos :-

      Now, they cater to people watching cat videos. At the moment, there is no device close to the Surface Pro for this purpose.

      I shall take his word for it.

    31. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      they have to sell it as a laptop that you can remove the keyboard, instead of a tablet.

      You mean, they sell it as a laptop for which you have to pay an extra $130 for the keyboard?

    32. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      Furthermore, factory specific costs can be and usually are capitalized.

    33. Re: Did they make money on Surface? by PopeRatzo · · Score: 1

      #NotYourTablet

      --
      You are welcome on my lawn.
    34. Re: Did they make money on Surface? by ganjadude · · Score: 1

      not really, I know quite a number of people in the music business, Ive been around it for a number of years now (its my hobby/failed business venture)

      Everyone working with protools and most other music tools are using the surface these days, it just makes sense for them when on the go. the touch screen makes mixing and fading a little more natural than using a mouse, and it has the hardware power to do everything well.

      honestly the onlything wrong with the surface is the OS which can be flashed to linux anyway

      --
      have you seen my sig? there are many others like it but none that are the same
    35. Re: Did they make money on Surface? by user+no.+590291 · · Score: 1

      Zing!

    36. Re: Did they make money on Surface? by davester666 · · Score: 1

      in context, I meant sell as in advertise it. To meet a slightly lower price point than the Macbook Air, they unbundle the keyboard.

      --
      Sleep your way to a whiter smile...date a dentist!
    37. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      The ones who aren't using MacBook Pros with Logic Pro X are using MBPs with Ableton but usually still have Logic Pro X. Is that what you mean?

    38. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      It's only terrible if you are an old grumpy goose that hates progress

    39. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      I have designed and certified aircraft engine ice protection systems for several aircraft now in service using a finite-difference thermal analyser that I wrote in Excel. Admittedly it was only ever meant to prove the algorithms but I'm still only half-way through the Fortran port and people keep wanting the calcs done... It is DOG SLOW, of course, but the nice thing is I can examine every single variable at every step of the calculation. Iteration is the killer feature, but I also use a lot of the built-in linear algebra tools (and even VBA when there's no other way...)

    40. Re: Did they make money on Surface? by Anonymous Coward · · Score: 3, Insightful

      1. The hardware is locked to Windows. My understanding is that the newer Pro versions aren't locked, but that's despite MS's efforts otherwise.

      None of the Pro versions have ever been locked. Good luck loading Ubuntu on that iPad too. Hypocrite.

    41. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      I switched to Linux in 2008, so I've been using OpenOffice/LibreOffice for the past 6 years. I do not miss Excel.

    42. Re: Did they make money on Surface? by ahabswhale · · Score: 1

      As someone who just recently bought a SP3 and will be returning it shortly, I agree with your post wholeheartedly. The thing is just awkward in so many ways and is a terrible tablet. That said, if you want a very portable laptop that you won't actually be using on a lap but a real desk and don't mind the tiny screen, it's a good option.

      --
      Are agnostics skeptical of unicorns too?
    43. Re: Did they make money on Surface? by PopeRatzo · · Score: 1

      That would have been true last decade. It's changed.

      --
      You are welcome on my lawn.
    44. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      How is Excel on your list of "don't really work" apps?

      A) Learn how to quote. When you use quotation marks you are either being literal or possibly sarcastic or snarky or maybe referencing what someone would say. There may be other uses. You weren't being sarcastic or snarky. At best you were paraphrasing. Improper quoting isn't like speeling of grammer issues (which only make the writer look stupid). You are improperly - and possibly unethically - making false attributions to another person.

      "When you paraphrase, you must entirely reword material taken from a source, without using quotation marks."
      http://quotations.about.com/cs...

      B) The reason you are, at best, paraphrasing, is that you didn't quite catch the meaning. This might explain why you didn't quote or paraphrase correctly. I took "Excel - often you need to use it because it's broken the same way as the software your accountant uses" to be a comment about an artificially created need for compatability.

      Hilariously, you fit that mark perfectly:

      My attempt to get used to the Apple operating system (I got a Macbook for work) was mostly successful but I eventually fell back to Windows because their version of Excel was so much better than the Mac version (not Apple's fault, but still important). There were some other minor reasons, such as me liking Notepad++ more than Sublime and my opinion that Windows 7 handles multiple large monitors better, but Excel was the main reason. I also like Visual Studio for most development, but IntelliJ was good enough. The alternatives to Excel were not good enough however.

      In a quest for compatibility (GP's point if I understood correctly), you are buying MULTIPLE versions of the same damn product... a product you seem to be shilling for based on GP's def, "What Microsoft does well is getting IT people trained up to believe in their stuff. Many of the "shills" don't even realise they are that. They work for small IT companies where the only training they get is MS subsidised."

      All your points can be true that Excel is a great product. This is not incompatible with you being a shill. However, you trumpet the product's shortcomings so loudly, that the irony is quite amusing. Sorry if I used "irony" incorrectly. I never got the proper meaining of it.

    45. Re: Did they make money on Surface? by ranton · · Score: 1

      In a quest for compatibility (GP's point if I understood correctly), you are buying MULTIPLE versions of the same damn product...

      No, I buy multiple versions because I find the software useful and that is their licensing for the Windows version doesn't include the Mac version. I also have bought various mobile apps twice to work on my iPad & Android phone. A quest for compatibility has nothing to do with it. If I was happy just exporting to CSV or using OpenOffice / Calc I would be able to, but I'm not happy with either of these alternatives.

      All your points can be true that Excel is a great product. This is not incompatible with you being a shill. However, you trumpet the product's shortcomings so loudly, that the irony is quite amusing.

      So even when you are admitting to some shortfalls in a product you are still being a shill? By your and the GP's definition of a shill, everyone who ever says they like a product is a shill.

      --
      -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
    46. Re: Did they make money on Surface? by Bent+Spoke · · Score: 1

      Since you asked...

      We use a set of ~30 sheets in Excel to describe inputs to our application. I cringe when I have to use Excel because:

      1) the dialog to pick a sheet is limited to like 12 sheets, and clicking "See All" pops a window that can be scrolled, but also shows only 12 sheets at a time. This window can not be resized so I spend endless amounts of time scrolling back and forth in it.

      2) Excel lets me open multiple spreadsheets, but they all inhabit a single window. I guess side-by-side viewing could be dangerous.

      3) We have to export to Excel-2007, so our extraction tool can read it. And Excel only lets you export to CSV a single sheet at a time.

      4) And we have to version control the CSV so that we can tell the differences between one release and the next, because Sharepoint does squat in this realm.

      and I hardly even use the beast...

    47. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      >IntelliJ was good enough

      IntelliJ is awful. Freezes every few seconds even on a medium sized code base.

    48. Re: Did they make money on Surface? by Anonymous Coward · · Score: 0

      Your argument is flawed. My wife is an accountant who has Excel for everything. She swears by it, and so do many folks that I know (especially in IT management). I have known almost all of them to use both Windows and Mac versions, and they hardly complain. It DID take them some time to get used to how different they look and feel, but that's not anyone's fault. They would not trade their Macs today for anything!

  2. Kreative Uhcounting by Anonymous Coward · · Score: 0

    Is what it is. Make no mistake. Foo!

  3. Those bastards? by Anonymous Coward · · Score: 5, Informative

    They also "make money" at $20 per Android phone, even though they wrote **NONE** of the software. And the list of bogus software patents is public now, it's all crap. Screw them and their thievery.

    1. Re:Those bastards? by NotInHere · · Score: 4, Insightful

      At least they didn't taint my device with their software, that should be worth that money.

    2. Re:Those bastards? by Anonymous Coward · · Score: 0, Offtopic

      I'm sure the lawyers for Samsung would be happy to hear your arguments that the patents claimed by Microsoft are "crap". Be sure to contact them right away.

    3. Re:Those bastards? by Anonymous Coward · · Score: 1

      Android is based on Linux, you could also mention Google is ripping of every people who donated their time and code to the system for free.

    4. Re:Those bastards? by ChunderDownunder · · Score: 5, Funny

      Ease up, Android will be one of the few Linux distros by 2016 not using systemd. :-)

    5. Re: Those bastards? by Anonymous Coward · · Score: 0

      Lol.

      Android will be using systemd to launch apps in a jail.

    6. Re:Those bastards? by Anonymous Coward · · Score: 0

      That is their problem not yours.

    7. Re:Those bastards? by Anonymous Coward · · Score: 0

      And then there was Cyanogen...They went in thinking that it would harvest the best of what open-source has to offer, which it did, and then they tried to buy it but it failed miserably: http://www.phonearena.com/news/Cyanogen-Inc-said-no-to-a-Google-buyout_id61315

      They won't do that again!

    8. Re:Those bastards? by Billly+Gates · · Score: 2

      What's wrong with Emacs folks?

      --
      http://saveie6.com/
    9. Re:Those bastards? by Anonymous Coward · · Score: 0

      This significantly exceeds their revenue from Surface and Windows Phone combined. It makes you ask why do they bother ?

    10. Re:Those bastards? by tlhIngan · · Score: 2

      Ease up, Android will be one of the few Linux distros by 2016 not using systemd. :-)

      Because Android was probably the inspiration of systemd. Android's init system combines a daemon manager, udev, a property manager and init, among other things.

      Granted, given the limited number of tools on Android, you pretty much need init to do these things because it's very difficult to manage daemons and other things.

      The interesting thing is Android's init still cannot run a file. You can run something as a one-shot service to get around it, then start the service every time you need to run the executable, but it's a workaround to a bug that's been present since the beginning.

      And no, Android's init doesn't even support sysvinit as a fallback.

    11. Re:Those bastards? by squiggleslash · · Score: 1

      Counterpoint: They invented FAT, which is where significant amounts of the royalties are coming from.
      Counter-counterpoint: If they invented FAT, and Android Phones are feeling obliged to support it, they should probably be paying Android phone manufacturers $20 per unit...

      (OTOH, FAT was a significant improvement on the CP/M file system, its biggest rival at that point, so there's that. Still, it says a lot that the actual FAT related patents they're collecting Android revenue on are actually for hacks to get around some of FAT's most stupid LIMITATI.ONS)

      --
      You are not alone. This is not normal. None of this is normal.
    12. Re:Those bastards? by nukenerd · · Score: 1

      Android is based on Linux, you could also mention Google is ripping of every people who donated their time and code to the system for free.

      Google maintain Android. The Android software is free for anyone to use and to sell loaded into hardware. Only if you want to attach the trademark "Andoid" to it do you have to pay Google a licence fee; is that what you mean by "ripping off"?.

      As for people "donating their time and code" to the Linux ecosystem, I do that myself in a small way. Feel free to use it, I don't mind. That is the point.

    13. Re:Those bastards? by Anonymous Coward · · Score: 0

      So you're happy to pay the Windows tax too?

  4. Did they really lose money by Anonymous Coward · · Score: 5, Insightful

    or just didn't make enough to also pay taxes?

    1. Re:Did they really lose money by Anonymous Coward · · Score: 0

      I know everyone is making fun of them. However, I was walking thru a store and spotted a sorta cool looking computer. These little guys are actually pretty slick. Not that I would buy one as it is too small.

  5. Microsoft paid the NFL 400 mil to use Surface. by Anonymous Coward · · Score: 3, Interesting

    What other expenses are Microsoft conveniently ignoring to say they turned a profit?

    1. Re:Microsoft paid the NFL 400 mil to use Surface. by Anonymous Coward · · Score: 0

      God, how dumb are consumers? If some NFL homothug uses it then every dipshit will rush out and by it? I mean it worked for Beats and if this report is to be believed it worked for Microsoft too...

    2. Re:Microsoft paid the NFL 400 mil to use Surface. by Anonymous Coward · · Score: 0

      Well they aren't ignoring them per se - they are using Gross Margin, which means something very specific (and favourable to Microsoft in cases like this)

      Accounting normally means GM does not include expenses like that $400 million Microsoft paid NFL to use the tablets they gave them, get written off as a marketing cost elsewhere on the balance sheet, and are not accounted for directly against Surface itself.

      Similarly, product placement costs on TV shows would not be costed in to GM against Surface.

      Its pretty likely, that all in, they are net losing money per Surface sold.

      They can probably afford to do this for a couple of years yet before they need to abandon it.

      (Samsung has been through a similar process where it was spending USD $500-700 on marketing per (high end) phone sold in certain markets, and their sales have tanked once they've no longer been able to afford that level of marketing effort.)

    3. Re: Microsoft paid the NFL 400 mil to use Surface. by Anonymous Coward · · Score: 0

      Really? Info is right there in the 10k, prove your claims.

    4. Re:Microsoft paid the NFL 400 mil to use Surface. by BonThomme · · Score: 2

      or the fact the NFL announcers still call them iPads...

  6. Gross margin? by whoever57 · · Score: 3, Informative

    But what's finally good news for the company is that the Surface gross margin was positive this quarter, which means the company finally starts making money on Surface sales.

    I think that someone doesn't understand accounting very well. Thre are all kinds of real costs that don't get factored into the gross, so this report does not show whether or not Microsoft is actually making money on Surface sales. For example, all that advertising cost.

    --
    The real "Libtards" are the Libertarians!
  7. Not surprising, the Pro's are slick gadgets by Anonymous Coward · · Score: 1

    It really shouldn't be all that surprising. The Surface Pro's are slick little devices that also happen to be full power x86 PCs. Beats the hell out of the x86 tablets that HP and Acer were crapping out before.

    The Pro / Pro 2 was a little heavy but the Wacom digitizer works well with Wacom styli which rocks for taking notes & drawing. The Pro 3 is larger but lighter than the Pro 2 but I hear the digitizer is a different brand which isn't as precise.

  8. Re:Where's Bennett Haselton? by Anonymous Coward · · Score: 1

    Has Bennett Haselton confirmed the profitability of the Surface yet?

    No, he's busy confirming the perverted nature of your mother's sexual proclivities. We don't expect his report for another week or so. Go back to reddit/soylent/whatever and check beck here around Halloween. Thanks in advance.

  9. MS fine for some things, not for others by unixisc · · Score: 1

    Yeah. Whenever I go thru their stores, I'm impressed by the hardware. Just wish 2 things - that there were more AMD tablets around (the only AMDs that I've seen there are laptops, nothing interesting), and that Windows 10 gets on them sooner rather than later. Windows 8 is a showstopper, but Windows 10 - which would be Metro in tablet mode or Windows 7 in laptop mode - is pretty acceptable.

    The other thing - I like the Lumias as well. I have an iPhone 5s and a Lumia 929. I use the iPhone for Facetime w/ family members, as well as games & music, while the Lumia I use for work related stuff - calls, e-mails while I'm away from my desk, Yelp, Wallet, OneNote and so on. I do wish some apps, such as ADP and Vonage could be there on Windows Phone, but other than that, no serious complaints.

  10. Makes sense by Anonymous Coward · · Score: 0

    As long as their protocols remain compliant with most RFCs, any cloud connections - including SQL and, notably, SMTP - should bring them uptrending revenue streams. The only risk is that forced logouts in patched timezones will add to the boot sector.

  11. What a relief! by Anonymous Coward · · Score: 0

    I've been up nights for weeks worrying about Surface.

  12. Just wait.... by Glasswire · · Score: 0

    "Microsoft seems to be correcting its hardware strategy, as well as its software one, with the Surface RT flop getting the axe... "
    Just wait and see how unhappy the buyers of ARM-based plain Surface RT tablets are when they find out
    a) They aren't getting any new updates or UI improvements
    b) App vendors are shifting to Surface Pro x86 binaries
    c) They can't upgrade to Windows 10
    The difference between disposable consumer appliance items like phones/(most)tablets and Personal Computers is that PCs can be upgraded (or get lighter OSes put on them when they get old. PCs are general purpose tools which allow you to do things the original vendor may not have expected or even approve of. They are not a closed,static gadget.
    (BTW, if there's no Surface, doesn't it seem funny to only have a Surface Pro?)

    1. Re:Just wait.... by Anonymous Coward · · Score: 0

      Microsoft is sure to go out of business when all 10 folks who bought a Surface RT vow to never, ever again buy another Microsoft product.

      And regarding "Surface Pro" when there's no "Surface" - there actually was a Surface, once. It ran Windows 9.

    2. Re:Just wait.... by Anonymous Coward · · Score: 0

      If they support the RT devices door three years, they will have at least tied Apple for length of device support.

    3. Re:Just wait.... by Anonymous Coward · · Score: 0

      I have a Surface RT and I couldn't care less for what you wrote. I have fully functional IE 11 on an ARM so malicious sites cannot load any plugins. I also bought the whole things (with the office package on it) for less than $200 (black Friday sell), so I consider it MS office that comes with some hardware. Basically a disposable typewriter.

  13. Re:Where's Bennett Haselton? by Anonymous Coward · · Score: 0

    I've been away from slashdot for awhile.. who is this Bennett Haselton guy? I read his wiki page, so I know he runs some anti netfilter websites.

    On slashdot, is the the new Jon Katz, Michael Sims, or more like a new Timothy?

  14. Re:Where's Bennett Haselton? by Lotana · · Score: 2

    He is the new Jon Katz/Roland. But his opinion pieces are even more shit.

  15. Surface is the least interesting thing about MSFT by Anonymous Coward · · Score: 0

    Unless you count Zune. At least it was a good punchline.

    So quit harping on that piece of junk and whether some ham fisted fools in Redmond can make a buck on it. MSFT sells (extorts if you have to pay) software of dubious quality for buckets of money. Keep your focus fan boy.

  16. Fewer by Anonymous Coward · · Score: 0

    than a million

  17. The corporate sector is where it will sell by cyber-vandal · · Score: 3, Insightful

    A tablet running full Windows where you can connect seamlessly to Exchange and AD, run Office and other Windows only apps and their existing .NET devs can easily write apps for them. The org I work for is trialing them now and the initial feedback has been very positive.

    I can see the previous company I worked for going for it in a big way too. They have a lot of field staff who have lots of data to capture.

    1. Re:The corporate sector is where it will sell by MtViewGuy · · Score: 1

      Just wait until the Surface Pro 3 gets updated to Windows 10 by this time next year. Suddenly, the Surface Pro 3 (or whatever successor is on the market by October 2015) will be a hot-selling item for corporate users.

    2. Re:The corporate sector is where it will sell by Anonymous Coward · · Score: 0

      you're funny

    3. Re: The corporate sector is where it will sell by cyber-vandal · · Score: 1

      There's nothing dumb about giving someone a device that will seamlessly connect to their infrastructure and run their Windows only software. Windows tablets will gradually replace quite a few of the Windows laptops in use now.

      Windows is definitely dwindling in the consumer space and I can't see them ever catching Apple and Android tablets in that market but there's a huge largely untapped corporate market that Microsoft has a massive entrenched prescence in already.

  18. Bring back Gates of Borg by Anonymous Coward · · Score: 0

    I miss the days when Slashdot tagged microsoft stories with the gates of borg graphic. poor microsoft, let's be nice to them they have done so many good things for computing...

    1. Re:Bring back Gates of Borg by nukenerd · · Score: 1

      I miss the days when Slashdot tagged microsoft stories with the gates of borg graphic

      So do I. The picture of Gates was like he was in his 30's and I once suggested that they update it with him looking older with greying hair, as the company was likewise no longer the bright young thing that many people supposed it to be.

      With Gates virtually gone, what icon should there be instead of the bland MS trademark (for which I am suprised MS do not sue /. like : these takedowns) ? I suggest the Titanic, or King Kong (nothing to do with Balmer of course).

    2. Re:Bring back Gates of Borg by iggymanz · · Score: 1

      We can continue to use Gates, actual photo of his rotting corpse would be wonderful

  19. "Profit marrgin" may actually be repair costs by Antique+Geekmeister · · Score: 3, Interesting

    The Surface has turned out to be both very fragile, and very difficult to repair. The result is that when there is any damage, and with the constantly droppping fire sale prices, the only personnel I know who've bought them have each replaced them twice, within the 2 years that the devices have been available. The result would look like "new sales" because the price of the extended warranty to cover such repairs, along with the time it takes to navigate the repair and replacement system, is better spent earning the money to buy a new one if you insist on continuing with such a fragile device.

    1. Re:"Profit marrgin" may actually be repair costs by quantaman · · Score: 1

      "Profit marrgin"?

      Is that calculated as gross booty - total cannonball expenditures?

      --
      I stole this Sig
    2. Re:"Profit marrgin" may actually be repair costs by Antique+Geekmeister · · Score: 1

      Thank you for catching that, but no. My RSI is acting up a bit, I'm afraid I'll need to edit more carefully.

    3. Re:"Profit marrgin" may actually be repair costs by Anonymous Coward · · Score: 0

      "Profit marrgin"?

      Is that calculated as gross booty - total cannonball expenditures?

      That greatly deserves a +1, funny.

    4. Re:"Profit marrgin" may actually be repair costs by quantaman · · Score: 1

      "Profit marrgin"?

      Is that calculated as gross booty - total cannonball expenditures?

      That greatly deserves a +1, funny.

      There's no longer a need.

      A kind comment is superficial Internet validation enough.

      --
      I stole this Sig
  20. restructuring costs by ILongForDarkness · · Score: 1

    Such BS. A company one year gets to say: sorry we have no money for raises or profit for stockholders because we made an acquisition. Then a few years later they get to say "well we made a bunch of money but that dog we bought a few years ago is a real dog and has cost us 1B so far.

    They sell it both sides: sell the acquisition idea to the board as costing X and then almost always end up tacking on a bunch of restructuring costs, "reduction in goodwill" etc. Very rarely do the come back saying "hey that thing we bought is now worth more than when we bought it and doesn't need any restructuring". I'd love it if companies weren't full of Ceasar's hoping to conquer the world ("I'm more important because I manage more resources") but had people willing to say the company is big enough and contains the business units that make sense for it rather than pissing away money buying stuff that they usually end up righting off to large extent later. Give the money you can't use back to the shareholders.

  21. On what planet... by kenh · · Score: 1

    However, if we assume that the average spent amount on the purchase of this year's Surface Pro 3 was around $1000, then we have less than 1 million units sold, which isn't that impressive, but it's a good start.

    On what planet is selling a million units at about $1,000/ea not "impressive" or just a "good start"?

    --
    Ken
    1. Re:On what planet... by gewalker · · Score: 1

      Earth could qualify. I could easily sell 1 million 1 ounce Krugerands at $1,000.00 each and the only thing impressive would be how fast I lost hundred of millions of dollars.

      Selling a billion dollars worth of Surface 3 in a quarter cannot be judged to be impressive or not when considered as a stand-alone statistic. You have to compare market growth, profitability, etc. You will also need to compare to alternatives in the market.

  22. Sales to customers or channel? by Anonymous Coward · · Score: 0

    Were the Surfaces sold to actual customers, or into the retail channel where they're on someone else's books as inventory?

  23. The Surface project loses money .. by lippydude · · Score: 1

    "There’s been quite a bit of interesting financial commentary on Microsoft‘s Surface line of tablet-hybrids published recently. The Surface project loses money. Understanding the magnitude of those deficits is important." ref

  24. I just got a surface and let me tell you . . . by rhyous · · Score: 1

    I just got a surface and let me tell you . . .

    There will be many, many, many more Surface Pros sold.

    It is the only tablet that can be used for "production" as well as "consumption."

  25. Fine, but... by MoarSauce123 · · Score: 1

    ...making money is far fetched. Even if they truly have cash left (others doubt that), "making money" would have to include covering the huge write-offs of the past quarters. How long will that take?