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Microsoft Surface revenue at $853M, less than write-down and associated ad-spend

post #1 of 120
Thread Starter 
It was revealed on Tuesday that Microsoft has made only $853 million on its Surface tablet since the product line was introduce eight months ago, a number less than the company's write-down to adjust for unsold inventory, as well as an ad campaign pushing the device and Windows 8.

Surface
Microsoft's Surface Pro. | Source: Microsoft


According to Microsoft's 10-K filing with the U.S. Securities and Exchange Commission, which included the first public disclosure of how Surface is performing, the tablet lineup brought in a somewhat disappointing $853 million since it debuted in October 2012. The company accounted for sales up to June 30.

Because the pricing between the Surface RT and the high-end Surface Pro is so disparate, estimating units sold is quite difficult. As noted by GeekWire, if the original $500 cost of a Surface RT was used as the average selling price, it would mean Microsoft sold roughly 1.7 million units during the eight-month period. By comparison, Apple shipped 14.6 million iPads in the last quarter alone.

Disregarding units moved, the $853 million in revenue means Microsoft is losing money on its first computer hardware experiment. The amount is less than a $900 million charge the company took against earnings on unsold RT inventory. Microsoft recently slashed the price of the lower-end tablet by $150. Surface revenue is also outpaced by ad spending earmarked for the device and Windows 8, which came in at $898 million. Microsoft spent more money trying to push Surface than it made back in revenue.

While the effects of the price drop have yet to be announced, Microsoft's project appears to be floundering. Even in spite of negative ads targeting Apple's iPad.
post #2 of 120
sureface was DOA. the UI is unusable...complete garbage. I love watching Microsoft fail.
post #3 of 120

Absolutely no surprises.

The only thing that the Surface brought that was good was that Windoze can run on ARM.

Which won't be useful for a few years.


-QAMF

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post #4 of 120

They actually called the Surface an "iPad killer"? Right.

post #5 of 120
Microsoft has developed one good 1.0 product. One. In 1985. And it didn't run on a PC.

Everything else they bought or stole or it took them 3 tries to get right.

There is no internal creativity within Microsoft, and definitely no ability to develop a consumer desired device.
post #6 of 120

You know- I know it's trendy to hate Microsoft on this site, but those Surface tablets are not that bad. They aren't 'great', but they are not bad hardware, and I actually liked the tiled interface. It's different, and isn't a 'me too!' design like the Samsungs of the world have.
The GUI sucks as a desktop interface, there's no arguing that, but I wouldn't mind owning one... if I didn't already have my iPad(s) and they had the same amount of apps.
Flame away.

post #7 of 120
Quote:
Originally Posted by rcoleman1 View Post

They actually called the Surface an "iPad killer"? Right.

Yeah, just like the Zune was the iPod killer.  I guess Microsoft needs a reality check.  They have been dominating the industry due to their way of doing business, it's been backfiring on them and now it's reality time.


Windows is becoming less relevant as time goes on. 

post #8 of 120
Quote:
Originally Posted by QAMF View Post

Absolutely no surprises.


The only thing that the Surface brought that was good was that Windoze can run on ARM.


Which won't be useful for a few years.


-QAMF

Or ever...
post #9 of 120

Just apply the "80-20" rule. 80% RT (cheaper model) and 20% Surface (expensive model! There. That wasn't so hard! :) 

 

Man, I should be an analyst! :)

post #10 of 120
Like when Sheldon of the Big Bang Theory said to Raj who purchased an Apple iPod...

"You'll be sorry you bought that when Microsoft comes out with theirs."

Hey Ballmer, the people have chosen and they have four words for you... 'We Love The iPad!'

Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

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post #11 of 120
Quote:
Originally Posted by chuckmoser View Post

You know- I know it's trendy to hate Microsoft on this site, but those Surface tablets are not that bad. They aren't 'great', but they are not bad hardware, and I actually liked the tiled interface. It's different, and isn't a 'me too!' design like the Samsungs of the world have.
The GUI sucks as a desktop interface, there's no arguing that, but I wouldn't mind owning one... if I didn't already have my iPad(s) and they had the same amount of apps.
Flame away.

the (third generation) Zune wasn't "that bad" either.

 

it was just the wrong thing in the wrong place at the wrong (way too late) time.

post #12 of 120

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,

Quote:
 ...Microsoft is losing money on its first computer hardware experiment.

mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

 

Quote:
There is no internal creativity within Microsoft, and definitely no ability to develop a consumer desired device.

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

post #13 of 120
Quote:
Originally Posted by chuckmoser View Post

You know- I know it's trendy to hate Microsoft on this site, but those Surface tablets are not that bad. They aren't 'great', but they are not bad hardware, and I actually liked the tiled interface. It's different, and isn't a 'me too!' design like the Samsungs of the world have.

The GUI sucks as a desktop interface, there's no arguing that, but I wouldn't mind owning one... if I didn't already have my iPad(s) and they had the same amount of apps.

Flame away.

Or it has nothing to do with being trendy and everything to do with the product being mediocre.
post #14 of 120
I guess the choreography didn't pay off.
post #15 of 120

Rounding error.

Where are we on the curve? We'll know once it goes asymptotic!
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Where are we on the curve? We'll know once it goes asymptotic!
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post #16 of 120

the RT is totally Dead Man Walking. its brand ID itself is hopelessly destroyed. MS should mercifully pull the plug - tomorrow. if instead MS insanely insists on a V2 model this Fall, we are truly watching Ballmer's Folly.

 

the Pro MS can prop up indefinitely i suppose, no matter how token the sales. and i know who buys them - all those MS IT guys who had the best years of their lives with Windows 95 and will never let go until the day they die.

post #17 of 120
Quote:
Originally Posted by Nighthound74 View Post

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,

mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

 

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

 

Doesn't MS lose money on the XBOX? Massive amounts of money.

na na na na na...
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na na na na na...
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post #18 of 120
Quote:
Originally Posted by Nighthound74 View Post

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,
mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

It took like 6 years for the 360 to be profitable for them. They're lucky this last console generation lasted as long as it did or the 360 would have been a loss too.
post #19 of 120
Quote:
Originally Posted by Pendergast View Post

I guess the choreography didn't pay off.

Instead of riverdance they wound up doing a Native American rain dance. Shame their parade was the same day.

Originally Posted by Marvin

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post #20 of 120
Quote:
Originally Posted by Nighthound74 View Post

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,

mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

 

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

 

what alternate reality do you live in?

 

The XBox 360 was a massive RROD hardware failure, with an estimated 40% failure rate for the first several years, including a massive $1 billion write off by MS for warranty costs. the hardware wasn't fixed until V2, and it still is a very noisy box. it makes a profit now, but over its total lifespan very possibly not yet. and sales have dropped in the last two years along with the entire console market due to handhelds - a permanent change of focus to hard core gaming - a market niche.

 

and there is one and only one reason for the eventual "success" of the XBox - Halo. the one smart thing MS did was buy Bungee and get along with the killer game that hard core gamers must have. MS did not develop the game, and Bungee is now independent again, but MS still has the exclusive on Halo. what are we on now - Halo 4?

 

the sole innovation by MS is its Kinect controller, a much superior version of the Wii's original UI breakthrough based on MS years of work on optical UI systems. kids love it.

 

the new XBox One should do well this holiday season, but we will see what market 'legs' it has after that. it is not going to become the general purpose home entertainment hub that MS wants, because the price is just too high and their are too many other options at much lower up front cost.

post #21 of 120

They lose money on the unit itself, but they make up for it in game sales and Live subscriptions.  Losing money on the unit itself doesn't at all mean it's not successful not creative or not desired by consumers

post #22 of 120
Quote:
Originally Posted by Nighthound74 View Post

They lose money on the unit itself, but they make up for it in game sales and Live subscriptions.  Losing money on the unit itself doesn't at all mean it's not successful not creative or not desired by consumers

Errr....OK?

post #23 of 120
Quote:
Originally Posted by island hermit View Post

 

Doesn't MS lose money on the XBOX? Massive amounts of money.

the original Xbox lost around 400 million dollars.


-QAMF

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post #24 of 120
Quote:
Originally Posted by Nighthound74 View Post

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,

mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

 

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

how about the original XBOX? was that "Computer HW" too? how did that do? 

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post #25 of 120
Quote:
Originally Posted by bullhead View Post

sureface was DOA. the UI is unusable...complete garbage. I love watching Microsoft fail.
But Apple is copying Win8 with iOS 7, talking about stupidity, like trading gold for dung.
post #26 of 120
Quote:
Originally Posted by Nighthound74 View Post

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,

mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

 

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

the xbox and xbox 360 have lost billions.  And both finished in third place in the console wars.  So yeah, there are failures

post #27 of 120
Quote:
Originally Posted by BwhAgain View Post

But Apple is copying Win8 with iOS 7

This is obviously Steve BALDmer posting in here again!

iOS7 looks nothing like your tiled Windows Shit! Nice Try!

Surface is dead deal with it! Apple kicked your Ass again!
post #28 of 120
Quote:
Originally Posted by Alfiejr View Post

 

what alternate reality do you live in?

 

The XBox 360 was a massive RROD hardware failure, with an estimated 40% failure rate for the first several years, including a massive $1 billion write off by MS for warranty costs. the hardware wasn't fixed until V2, and it still is a very noisy box. it makes a profit now, but over its total lifespan very possibly not yet. and sales have dropped in the last two years along with the entire console market due to handhelds - a permanent change of focus to hard core gaming - a market niche.

 

and there is one and only one reason for the eventual "success" of the XBox - Halo. the one smart thing MS did was buy Bungee and get along with the killer game that hard core gamers must have. MS did not develop the game, and Bungee is now independent again, but MS still has the exclusive on Halo. what are we on now - Halo 4?

 

the sole innovation by MS is its Kinect controller, a much superior version of the Wii's original UI breakthrough based on MS years of work on optical UI systems. kids love it.

 

the new XBox One should do well this holiday season, but we will see what market 'legs' it has after that. it is not going to become the general purpose home entertainment hub that MS wants, because the price is just too high and their are too many other options at much lower up front cost.

 

Microsoft did not create kinect.  they licensed the tech from PrimeSense (http://www.primesense.com)

post #29 of 120

This makes me wonder whether the Pro model is actually generating a positive net income.  Previous numbers mentioned the RT only, these mention both, so perhaps the reason why the entire Surface line isn't doing as poorly as the Surface RT may imply that the Surface Pro is doing better / well?  Correct me if I'm wrong, economy is not my field expertise.

post #30 of 120
I'll say it one more time: It's not just about the concept or idea, but also about its implementation. And that's what Apple excells at. Microsoft's concept of a bifurcated environment with its poor implementation is inherently destined to fail. And this is just proof of that --does anybody still question this?

Lack of taste, poor concept, poor implementation, poor performance, software limitations due to the ARM architecture, and to top it all a high price tag... well Microsoft... there you have it.
post #31 of 120
Quote:
Microsoft's project appears to be floundering. Even in spite of because of negative ads targeting Apple's iPad.

 

Fixed that.

post #32 of 120
Quote:
Originally Posted by eckergus View Post

I'll say it one more time: It's not just about the concept or idea, but also about its implementation. And that's what Apple excells at. Microsoft's concept of a bifurcated environment with its poor implementation is inherently destined to fail. And this is just proof of that --does anybody still question this?

Lack of taste, poor concept, poor implementation, poor performance, software limitations due to the ARM architecture, and to top it all a high price tag... well Microsoft... there you have it.

All correct but don't forget Microsoft stole everything they are famous for. Window was simply reversed engineered Mac OS and Office was Steve's concept for the Mac Plus. That git Gates was hired by Apple to implement Steve's concept for Office and stole it. The sooner that dung heep goes out of business the better.

What I love is that Gate's impact on the planet will be memorialized by Monkey Boy.
Edited by digitalclips - 7/30/13 at 7:27pm
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post #33 of 120

I believe it will not be very successful itself since Microsoft will be competing with other Windows 8 Ultrabook hybrids. This will mean direct competition within their eco-system which often becomes race to the bottom margins. Unless they can come up with a killer-app that everyone must have and only they can offer with Surface Pro, the market will likely look for cheaper alternatives.

post #34 of 120
Quote:
Originally Posted by bullhead View Post

the xbox and xbox 360 have lost billions.  And both finished in third place in the console wars.  So yeah, there are failures

That's definitely wrong. The 360 is finally profitable for Microsoft but I don't know about the original Xbox. I do know the original Xbox finished ahead of Gamecube and behind PS2 for second place and the 360 easily won this generation after the Wii died off. They have been the leading console seller in the US for like 26 months in a row now.

post #35 of 120
Quote:
Originally Posted by digitalclips View Post


All correct but don't forget Microsoft stole everything they are famous for. Window was simply reversed engineered Mac OS and Office was Steve's concept for the Mac Plus. That git Gates was hired by Apple to implement Steve's concept for Office and stole it. The sooner that dung heep goes out of business the better.

What I love is that Gate's impact on the planet will be memorialized by Monkey Boy.

Poor Xerox, nobody seems to remember that everyone else actually stole from them...

 

Gates is doing a lot more for the planet than many billionaires ever did or will ever do, and this includes Jobs.  Jobs might have contributed to charity, but Gates is funding research.  Credit to where it's due.

post #36 of 120
Quote:
Originally Posted by bullhead View Post

the xbox and xbox 360 have lost billions.  And both finished in third place in the console wars.  So yeah, there are failures

xbox cost 400 million (Although, with any game sales after 360 (however few) that might be a few million less) the 360 I believe has made profits.  Just very slim ones.

They have one of the highest attachment rates (er, games sold per console sold) to my knowledge.  The issue is their damn profit structure... *ugh*

impossible to tell, but even with the RRoD fiasco MS still probably will make a few hundred million off of the Xbox 360 when all is said and done.

Quote:
Originally Posted by macart View Post

This is obviously Steve BALDmer posting in here again!

iOS7 looks nothing like your tiled Windows Shit! Nice Try!

Surface is dead deal with it! Apple kicked your Ass again!

iOS7 does indeed look bit more like W8P.  Deal with it.

Apple is not stupid, when they see ideas implemented in a better way than their setup they are willing to change.  Change slowly to ensure nothing gets messed up, but still change.  Like the notification center in iOS 5/6 (7 is different, I don't know the history behind it.  I think that is all Apple) and folders.  That is all that comes to the top of my head, in terms of stuff from Android.

Apple is smart, if they see something they think has potential to improve their device on a competitors, they will remake it, but better.
 

Quote:
Originally Posted by Epsico View Post

This makes me wonder whether the Pro model is actually generating a positive net income.  Previous numbers mentioned the RT only, these mention both, so perhaps the reason why the entire Surface line isn't doing as poorly as the Surface RT may imply that the Surface Pro is doing better / well?  Correct me if I'm wrong, economy is not my field expertise.

I am not sure.  I would imagine the Pro model is doing better, if just because it isn't crippled by Tegra 3 and lack of apps to run.

As well, it is really closer to a laptop.

Quote:
Originally Posted by AnalogJack View Post

 

Fixed that.

lol :) nice!

-QAMF

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post #37 of 120
Quote:
Originally Posted by Epsico View Post

Poor Xerox, nobody seems to remember that everyone else actually stole from them...

 

Gates is doing a lot more for the planet than many billionaires ever did or will ever do, and this includes Jobs.  Jobs might have contributed to charity, but Gates is funding research.  Credit to where it's due.

1. yeah.

2. Jobs, for the genius he was, was not what most would consider a kind person.  At least, that is the impression I get from biography from Walter Isaacson.  If I remember that right, he didn't even give that much to charity.  That is how he was.

3. Bill Gates has dedicated tons of money into things that are helping, or will be helping hundreds of millions, if not billions, of people worldwide.

-QAMF

Active on S}A forums.  S|A student level subscriber.  Don't claim to know what is in the articles.

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post #38 of 120
Not "has made only $853 million".
Has grossed only $853M.
The problem is that "made" can mean gross revenue or net profit.
post #39 of 120
Quote:
Originally Posted by TheElectricChairRepairman View Post

I believe it will not be very successful itself since Microsoft will be competing with other Windows 8 Ultrabook hybrids. This will mean direct competition within their eco-system which often becomes race to the bottom margins. Unless they can come up with a killer-app that everyone must have and only they can offer with Surface Pro, the market will likely look for cheaper alternatives.

Like I mentioned before (read reply #30), Microsoft's concept of a bifurcated environment is inherently doomed to fail. It has proven to be unappealing to consumers due to its incoherent way of working. More so on "traditional" devices such as desktop or laptop computers (ultrabooks) with touch screens. Microsoft continues to neglect the "Gorilla Arm Syndrome" and will continue to fail to attract people to adopt this touch based interface on these "traditional" computers because of this fundamental flaw.

So going back to your comment, the only threat Microsoft has is Windows 8 itself, not necessarily the container it comes in --whether it is a Surface, a Desktop, an Ultrabook, etc.

But hey, what do I know? We'll have to wait for another article like this to see what happens.

To read more on the Gorilla Arm Syndrome read: http://www.wired.com/gadgetlab/2010/10/gorilla-arm-multitouch/
Edited by eckergus - 7/30/13 at 7:56pm
post #40 of 120
Quote:
Originally Posted by Nighthound74 View Post

Although the Surface has pretty much been a failure for MS, I have a big problem with the statement,

mostly because its inaccurate.  The XBOX360 which is "computer hardware" has been and continues to be massively successful.

 

Another opinion with absolutely ZERO merit.  Again..XBOX360, wouldn't be such a sucess if it wasn't both creative and highly desired.

 

...he said, while kicking the Xbox, KIN, and Zune under the bed. "Oh that? That's nothing. Pay no attention to that."

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

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