Microsoft is losing money on the Surface; has only sold 1.7 million tablets

by Doug Drinkwater

July 31 2013

Microsoft has taken enough hit on its Surface tablets
Microsoft has taken enough hit on its Surface tablets

These are dark days for Microsoft in its battle to become competitive in the tablet market. No sooner had the Redmond giant paid $900 million on unsold Surface tablets, a new filing suggests that Windows tablets are also losing the firm money.

Microsoft recently filed with its Form 10-K report with the Securities and Exchanges Commission, and the paper makes for stark reading concerning the firm’s tablet ambitions.

The form details that Microsoft made just $853 million in Surface tablet revenues in the eight months from launch to June 30, with this accounting for less than 5% of Microsoft’s Windows division revenues ($19.2 billion) earned in fiscal 2013.

On its own, this figure wouldn’t be so bad if it wasn’t for the fact that the SEC filing also details that Microsoft’s sales and marketing expenses increased $1.4 billion, or 10%, because of the big ad campaigns for both Surface and Windows 8.

Microsoft hasn’t publicly announced how many Surface tablets it has sold, although Geekwirereports that this latest revenue figure probably equates to around 1.7 million units.

This is a pretty sound estimate considering IDC forecast that Microsoft sold 900,000 Surface tabletsin Q1 and that a previous Bloomberg report revealed that the firm had sold 1.5 million tablets up until May.

July hasn’t been a good month for Microsoft when it comes to tablets. The firm was forced to write-down $900 million on an “inventory adjustment” of unsold Surface RT tablets earlier this month, and has since discounted all models by $150.

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  • John Swain
    1 year 3 months ago

    Surface RT was doomed before it left the design lab. Microsoft did not identify who was likely to be the buyer in an already crowded field of tablets. They were never going to get Apple I-Pad buyers to jump ship. The number of competing apps was nearly infinitesimal in comparison to Android and Apple. But worst of all, it was released with an edition of windows that limited its access to a full blown use of Microsoft Office software. A full version of Windows 8 would have hogged the HD space of the device. So, why in the world would anyone buy this thing? What is it good for? Especially at the unrealistically high $500 dollar price tag. $500 is still a couple of hundred dollars higher than a good laptop with a 500 gig HD, 4 gigs ram, and a full version of Windows 8. If Microsoft is fool-hardy enough to release hardware that will not hold and run all of its software, somebody should drop a dime and call Bill about the problem. He would understand what seems to be what Ballmer is still in the dark about.

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