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

Posted:
in General Discussion edited January 2014
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.
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Comments

  • Reply 1 of 120
    bullheadbullhead Posts: 493member
    sureface was DOA. the UI is unusable...complete garbage. I love watching Microsoft fail.
  • Reply 2 of 120
    qamfqamf Posts: 87member


    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

  • Reply 3 of 120
    rcoleman1rcoleman1 Posts: 153member


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

  • Reply 4 of 120
    theothergeofftheothergeoff Posts: 2,081member
    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.
  • Reply 5 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.

  • Reply 6 of 120
    drblankdrblank Posts: 3,383member

    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. 

  • Reply 7 of 120
    jungmarkjungmark Posts: 6,870member
    qamf wrote: »
    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...
  • Reply 8 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! :)

  • Reply 9 of 120
    rot'napplerot'napple Posts: 1,839member
    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!'
  • Reply 10 of 120
    alfiejralfiejr Posts: 1,524member

    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.

  • Reply 11 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.

  • Reply 12 of 120
    mikejonesmikejones Posts: 323member
    chuckmoser wrote: »
    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.
  • Reply 13 of 120
    pendergastpendergast Posts: 1,358member
    I guess the choreography didn't pay off.
  • Reply 14 of 120
    iqatedoiqatedo Posts: 1,724member


    Rounding error.

  • Reply 15 of 120
    alfiejralfiejr Posts: 1,524member


    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.

  • Reply 16 of 120
    island hermitisland hermit Posts: 6,217member

    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.

  • Reply 17 of 120
    j1h15233j1h15233 Posts: 274member
    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.
  • Reply 18 of 120
    tallest skiltallest skil Posts: 43,399member
    pendergast wrote: »
    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.
  • Reply 19 of 120
    alfiejralfiejr Posts: 1,524member

    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.

  • Reply 20 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

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