9 ms·

Microsoft's Surface sales figures are in, and they're hideous

• conroy 13y ago
  Could we please change the headline? No need to scream in HN headlines. Edit: thanks mods
  • e3pi 13y ago
    "Microsoft's Surface sales figures are in, and they're hideous" >Could we please change the headline? No need to scream in HN headlines. Don't blame the mirror when you see the reality of who you truly are.
• AceJohnny2 13y ago
  Ben Kuchera of the Penny Arcade Report has a scathing and spot-on review of Microsoft's advertising strategy for the Surface (as well as for the rest of their product line). It's interesting that PA's Mike "Gabe" Krahulik had a better pitch than MS themselves. http://penny-arcade.com/report/article/microsoft-is-killing-surface-with-breakdancing-and-its-going-to-hurt-xbox-o http://penny-arcade.com/report/article/microsoft-is-killing-...
  • seanmcdirmid 13y ago
    > It's interesting that PA's Mike "Gabe" Krahulik had a better pitch than MS themselves. Surface Pro is quite a different beast from Surface RT. I think Gabe was just in love with the Waccom stylus, which is not really unique to the Pro (other tablets have this also).
  • Tloewald 13y ago
    Their take on it was that it's a great artists' device. My initial take too. But having played with several Surface Pros, i found the device so lackluster I opted to buy a Yiynova display/tablet for half as much money, i don't need to mess with Windows 8 or buy new software. The real problem with Surface is that it's a crappy overall device. The two keyboard options both suck. Microsoft is hopeless at managing screen real estate so the serious applications such as office are weak. Yes, it's a great portable sketchpad, so Gabe is sold.
    • DigitalJack 13y ago
      How long have you had the yiynova? Can you give a quick review?
      • Tloewald 13y ago
        About a month. I got it because of Mischief. I posted a blog entry on it: http://loewald.com/blog/?p=5274 http://loewald.com/blog/?p=5274 Nutshell is the tablet is good but the software kind of sucks. I can only use the tablet in mirrored mode because the tablet driver maps the surface to the combined screen, and I need to use a third party app to run the tablet at native resolution. If I were a pro, I'd probably spring for a Cintiq, but for a hobbyist it's wonderful value.
    • anigbrowl 13y ago
      Their take on it was that it's a great artists' device. Well, visual artists at least. No existing audio software runs on it, and it doesn't even support playback of MIDI files. I remain somewhat interested in a Surface Pro, but (like Google, and like MS themselves on Windows for years) the Surface is only useful to musicians for checking email.
      • Tloewald 13y ago
        They're talking about the Pro which presumably runs tons of audio software.
        • anigbrowl 13y ago
          Oh, blind spot on my part - I was so fixated on the RT context that I didn't read the article properly. Thanks for pointing that out.
    • moocowduckquack 13y ago
      The main thing I want a tablet for is as a good sketchpad, ideally one that is fine with using a wood stylus so I can easily cut a stick to different nib shapes when I'm working.
  • rayiner 13y ago
    It's easy to blame marketing for Surface's failure, but I don't think that's the whole or even the most of it. If you read the reviews, nearly all mentioned or hinted at one thing: you should probably wait for the next iteration. And that's absolutely a product management failure, not a marketing failure. In tech, it is always the case that the next version of a product will be better, but it's a product design failure if the limitations of the device leave the user hankering for the upgrade from Day 1. Re: Surface RT, Microsoft launched at the same price point as the iPad 4, but substantially later, with a last-generation CPU/GPU, non-Retina screen, and a buggy, slow, pre-release version of Office RT. That last point was inexcusable, a product management fuck up of Apple Maps proportions. The whole point of Surface RT was Office, and every review of the device said "Office RT is slow and buggy." The overwhelming feeling with Surface RT is that "I'm really going to be kicking myself in 6 months when they release the next version with flagship specs to match the flagship price." Re: Surface Pro, Microsoft launched at a Macbook Air 11" price point, without the Air's great keyboard and with substantially weaker battery life (in Engadget's test, half the battery life of the comparably-sized Acer W700). The overwhelming feeling with Surface Pro was "I'm really going to be kicking myself when they release the next iteration with Haswell and usable battery life." On top of all that, the segmentation was arbitrary and capricious. What's the difference between Surface RT and Surface Pro? It's an explanation that probably makes sense to a marketing guy somewhere trying to differentiate SKUs, but not one that I think resonated with consumers. Nexus 7 versus Nexus 10, iPad versus iPad Mini. That's how to do product differentiation--in a way that's immediately obvious to the consumer. There was also some weird design choices. Why the extreme wide-format screen? Did anybody even try reading a Word document in portrait mode on the thing? I can understand the format for consumer-oriented tablets, but Surface was supposed to be a "real work" office machine! Why are there two ways to manage settings, one set in Metro and another set in the Desktop? Why do so many things require going into the Desktop anyway? Who thought it was even a good idea to expose the user to two completely different UI's in the same device?
    • barista 13y ago
      regarding comparison with iPad, the CPU GPU combination does not matter because Surface was/is still plenty fast with the hardware it has. Agree on the screen and Office though. Although office was updated a month or two after the release and fixed the performance issues in time. I wouldn't necessarily attribute the problems to that. Marketing seems to have come around and have started chaning the message and attacking the iPad more directly in adverts like this http://www.youtube.com/watch?v=86JMcy5OqZA http://www.youtube.com/watch?v=86JMcy5OqZA and http://www.youtube.com/watch?v=wE7AQY5Xk9w http://www.youtube.com/watch?v=wE7AQY5Xk9w plus the reduced price should help make it attractive. It's one very functional device though. Just today I read an article of how it was perfect for a student. Will update with a link if I find it.
  • danielweber 13y ago
    Microsoft should be Microsoft and stop trying to be Apple. Microsoft isn't cool, and that's okay. Microsoft is the boring boyfriend you know is always there and will always load Office documents easily (see 'rayiner below). It's not sexy but it doesn't have to be.
    • melling 13y ago
      Microsoft sucks, plain and simple. They really always have. I've been following the PC industry for 30 years. Microsoft won because of Office (Excel, Word, Powerpoint) at a relatively cheap combo price, cheap clone PC's, and the fact that they forced clone makers to pay for DOS no matter which OS they shipped. PC makers had to basically ship DOS/Windows, killing off any hope that BeOS, OS/2, etc would gain any foothold. Apple was never really any competition because they were overpriced. Once the need for Office goes any, then any operating system will work for many people. Linux has finally won in the consumer space in the form of Android. Hopefully, we'll see a huge flood of "desktop/notebook" Android/Chromebook devices. Get "Office" in the cloud and the 90% desktop monopoly that Microsoft has had for two decades finally goes away. Don't get me wrong... This isn't Microsoft being the wrong company to have a monopoly, it's just silly that any company has a 90% market share. We don't buy 90% of our cars from General Motors. Let's get a little more innovation in the consumer space. Google, Apple, Microsoft, and maybe even... Ubuntu dividing up the market will be better for everyone.
      • jmduke 13y ago
        Office is incredible, incredible software. We're nowhere near replacing it with iWork/Google Docs/Open/Libre.
        • kyllo 13y ago
          I'll believe that when I stop randomly seeing "Microsoft Word/Excel/Outlook/etc. has encountered a problem and needs to close." Office is completely bug-ridden and unstable, and always has been.
        • btilly 13y ago
• Zigurd 13y ago
  OK, so you run a company with practically infinite resources, an OS that is portable across architectures, and a managed language runtime that's portable across architectures that powers hundreds of thousands (millions?) of useful applications with a suite of languages including what is arguably a nicer language than Java. You see Android running the same apps on multiple mobile device architectures using Java and the Dalvik VM. That's a technology you had since 13 years ago with NETCF. Hmmm. What to do? What to do? I KNOW: Let's segment the market by blowing off compatibility with a gazillion apps my enterprise customers have written and use and let's use Surface RT to go for a Quixotic attempt to beat Apple and Google with Modern apps which are over-sandboxed and can't talk to .NET apps. That comes off as derisive, but how do you say it nicer? They lost a billion dollars in a write-down - not a write-off - doing that, and not one word about "Gee, can we fix the product formulation?" Well, at least they didn't buy Motorola. That's going to be a write-down that leaves a mark.
  • cryowaffle 13y ago
    Google bought Motorola as a defensive patent move, it's almost completely intangible.
    • cremnob 13y ago
      That's not working out too well. http://www.theverge.com/2013/4/26/4271432/does-anyone-know-why-google-bought-motorola http://www.theverge.com/2013/4/26/4271432/does-anyone-know-w...
      • mullingitover 13y ago
        From that article: "Which again leads to the question: why did Google buy Motorola? The real answer is worth $12.5 billion." I love how people keep trotting this number out. Nevermind the fact that Moto had $3 billion in cash[1], which immediately became Google's cash when the purchase went through, so the real price was closer to 9.5 billion. Motorola also had 24,500 patents in its portfolio[2]. Apple, MS, and RIM paid 4.5 billion for 6,000 Nortel patents not long before the Moto sale. [1] http://dealbook.nytimes.com/2011/08/16/whats-behind-the-hefty-motorola-break-up-fee/?_r=0 http://dealbook.nytimes.com/2011/08/16/whats-behind-the-heft... [2] http://www.economist.com/blogs/babbage/2011/08/valuing-patents http://www.economist.com/blogs/babbage/2011/08/valuing-paten...
• freehunter 13y ago
  Anyone remember Microsoft's last huge push into the hardware market, the Xbox? How would this headline have looked in 2001? If we remember, Microsoft took seven straight year-over-year billion dollar losses until the Microsoft gaming division finally posted a profit in 2008. I don't mean to directly compare Windows RT with the Xbox, the point I'm making is that Microsoft is used to sustaining huge losses for long time periods until they finally capture the market they want. http://www.pcworld.com/article/148982/xbox.html http://www.pcworld.com/article/148982/xbox.html
  • chrischen 13y ago
    Yea but the Xbox had user adoption. What does the Surface have?
    • hkmurakami 13y ago
      What was user adoption like in year 1 of the XBox? I seem to remember that it really wasn't that hot, especially outside of the US (I remember it basically outright failing in Japan, but that's probably due to a combination of nationalism and a mismatch in the titles available to local tastes).
      • MBCook 13y ago
        I think it did OK in the states. The real problem was that the PS2 ended up being so phenomenally successful that the XBox looked terrible in comparison. By the end of the console's lifecycle it was a respectable machine. It had good games and defined the online experience with XBL.
        • chrischen 13y ago
          Not to mention taking an initial loss was standard industry practice in the console industry.
          • freehunter 13y ago
• zmmmmm 13y ago
  This is an interesting counter to the popular wisdom about what can be achieved with marketing. An unlimited marketing budget may be necessary but it is not sufficient, even with a notionally attractive proposition like the surface. It cannot overcome fundamental product issues like being too expensive, lacking killer applications, poor product targeting (who is the Surface RT really for?), or even just entrenched negative consumer perception. I think the Surface RT had all these issues and the marketing was not all that great on top of it.
• Aldo_MX 13y ago
  Without the ability to recompile desktop apps I don't see a good reason to have a WinRT device. Office is not enough.
  • rschmitty 13y ago
    Thats like saying your iPad is worthless because non of the OSX apps work on it If MS had the insane push of apps that iOS did your statement would not be an issue
    • Aldo_MX 13y ago
      My point is: What's the reason to enable the Desktop if you won't be able to run Desktop Apps? To play Minesweeper and use MS Paint? The Desktop doesn't even make sense in a Tablet! In my honest opinion I perceive the desktop as a last-resort when "there's not an app for that", and considering that "there are not a lot of apps for that" in Windows RT, for me it's ridiculous that they didn't allow the ability to use the desktop the way we have been using it in the last 18 years. If Microsoft were serious against the iPad they should have included the full Desktop experience in the first place.
• coldcode 13y ago
  As much as I used to hate them (competed vs Excel in the 1980s and lost) now I mostly pity them. I was at Apple in 1995 and it was both depressing and sad that a once great company was on death's door. But other than a huge amount of cash (which Apple sure didn't have, they even took away our popcorn maker) there doesn't seem to be a savior on the horizon.
  • sirkneeland 13y ago
    That anecdote could just as easily show how no all is lost for Microsoft..."See how doomed Apple looked, and look at them now!"
  • gruseom 13y ago
    competed vs Excel in the 1980s and lost I'd like to hear more about that. What was the product? Why did it lose?
    • coldcode 13y ago
      Trapeze was a very different kind of spreadsheet program, more like a cross between a numerical Mathematica and a spreadsheet. It was not built on the traditional row and column grid. We made the mistake of trying to market vs Excel when in reality it was a higher level modeling tool. I still get emails from former users who still remember it fondly.
      • gruseom 13y ago
        That's fascinating. I googled a little and found [1], which speaks highly of Trapeze. It even says that modern spreadsheets still haven't caught up to it. I'd heard of Improv, but not Trapeze. It sounds like you were earlier. Did you see a lot of similarity when Improv (and later Quantrix) came out? Also, why do you think that Excel users, even sophisticated ones, tend to stick to Excel instead of using higher-level modeling tools? Is it simply that Excel is entrenched, or are there conceptual reasons? [1] http://basalgangster.macgui.com/RetroMacComputing/The_Long_View/Entries/2011/3/26_Trapeze.html http://basalgangster.macgui.com/RetroMacComputing/The_Long_V...
• boyter 13y ago
  I predict that a refreshed Surface Pro with Haswell will sell quite well. I know that it is a product I want to buy (or a Transformer with Haswell whichever comes first). The Surface Pro is an excellent device let down only by battery life IMHO.
  • ihsw 13y ago
    Haswell works well in the laptop space, but Intel's tablet/mobile offerings aren't there yet. About seven months ago an Intel CPU architect/designer did a Q+A session on reddit, and here is a choice quote: > For mobile, we have no choice but to become relevant. As for when, my personal prediction for substantial growth is Q1 2014, domination in 2015. Source: http://r2.reddit.com/r/IAmA/comments/15iaet/iama_cpu_architect_and_designer_at_intel_ama/c7mppzh http://r2.reddit.com/r/IAmA/comments/15iaet/iama_cpu_archite...
    • boyter 13y ago
      The thing is I don't see the Surface Pro as a tablet so much as an ultra-book that can be a tablet. I want it as a highly portable laptop that I can use as a tablet on the way home. For me Surface Pro with 6+ hours of battery life (which Haswell should give it) would be perfect.
  • harigov 13y ago
    I loved Surface Pro but I felt that if they replaced i5 with an Atom [or atleast give it as an option], that would improve the battery life, reduce heat, make it slimmer and cheaper. Overall it would be everything that I want.
• tomkarlo 13y ago
  So if I'm interpreting this right, they did $853 of sales on two product lines that probably had about an $700 and $1200 average sales price (including accessories like the keyboard that attach at time of sale.) It depends on the mix, but is that something like 750K units of Surface RT and 200K units of Surface Pro? (Not ridiculously terrible for a first effort, but obviously disappointing given the marketing spend.) Why doesn't the article estimate the units?
• michaelpinto 13y ago
  If Microsoft is going to succeed they'll have to make mistakes. And the Surface shows some original thinking which I haven't seen before. So I think we should be rooting for Microsoft to bring new things to the industry because that benefits everyone else in the space. And I say this as a long time Apple fanboy...
  • mynameisvlad 13y ago
    But Microsoft is the devil's incarnate, didn't you know?! /s
  • sirkneeland 13y ago
    I concur. I instinctively root for underdogs, which is why I rooted for Apple in the 90s and 2000s. Never thought I'd find myself rooting for MSFT as an underdog, but that's the tech industry for you!
  • purplelobster 13y ago
    I honestly think the Metro UI is pretty neat. I don't really like most of the apps I've tried though, but the OS itself is pretty innovative compared to iOS. Love the app switching by swiping in from the right. The charms bar makes sense. Swiping from above to close an app is convenient. Search is good (but improved in 8.1). Most of all it's really snappy. Of course I'm biased because I actually bought one. It's the first MS product that impressed me for a long time. I like humble, beaten down Microsoft, I can feel they're actually trying and fighting for their life this time around, and I think if people would just try it out instead of spewing the default hate for M$, they might actually like it too. I have a feeling it's too little too late though, not sure if their business model can survive this decade. If Apple came out with an Air tablet that could be used as a laptop replacement, then that would probably be it for the surface and Windows 8.
• lowglow 13y ago
  I know some people at Microsoft. They said their entire team was gifted the Surface. They were used maybe twice and then never again. That's pretty sad.
  • fsck--off 13y ago
    Surface RT or Surface Pro? Were the Surfaces (or Surfactants, I'm not sure what the plural is) meant to be used in a professional capacity, or were they intended for personal use?
    • ihsw 13y ago
      That's the problem, nobody knows what it's for. You can replace a desktop with a Macbook Pro, but not a Surface Pro as was so touted. Don't even get me started on what the Surface RT is supposed to be.
    • Danieru 13y ago
      Surface RT, Personal use. The RT was the subject of several lunch time discussions over my recent internship. I remember one dev recounting the nightmare of buying a video rental through the xbox video app I think it was. The nightmare hinged on several issues one of which being the lack of silverlight support. His surface was out of space so downloading did not work yet streaming required the not present silverlight. He had to clear out some files in the end. Another dev used his as a picture frame. Beyond those two cases I only ever heard of the RT going unused. This despite an internal program one could use to unlock the surface. Once unlocked any developer could then recompile one of the windows binaries and generate a testing package which could be installed. In theory this means the devs could have full control of the device. In practice no one appeared to care. Another fun fact I learned: the Apple store gives discounts on the iPad if you show them your microsoft badge while the Microsoft store does not.
      • Happer 13y ago
        The Apple store gives discounts to employees of other IT companies as well: IBM, SAP, Dell, HP, etc. The list is pretty extensive. Just ask for it and don't forget to bring your company badge :)
• olefoo 13y ago
  Something that has been true for the past decade; inside of Microsoft are hundreds of small companies that will never get out. As I see it almost everyone involved with the Surface ended up paying the Windows strategy tax. Microsoft should have released two separate OS's Surface for tablets and Windows 8 for the workstation market. But, they should not have done what they did; which is to create a confusing frankenstein of a UI that will drop you into the windows explorer when you were trying to open an app with your fingers. This is a sterling example of how Ballmer's management team and the culture he has created have failed to understand both customers and markets. Too many agendas working at cross-purposes and no one who can outright say no to a bad idea coming from a powerful or connected source.
  • njr123 13y ago
    > Microsoft should have released two separate OS's Surface for tablets and Windows 8 for the workstation market This was the fatal mistake IMO, and I don't know why it doesn't get more discussion. I think Metro is a great tablet interface, and I can imagine that a Surface just running Metro with just the app store would sell pretty ok. Instead its confusingly positioned as some sort of tablet hybrid that still runs the old windows, but with a new start menu or something. And on the flip side, you have PCs running Metro, which not only absolutely sucks to use with a mouse and keyboard, the new interface puts off corporations from upgrading because they are worried about training costs etc. Its like thinking, 'So, Excel sells pretty well, and Word does too. Therefore we should develop a hybrid Word processor-spreadsheet application'. Incidentally, I don't know that Ballmer is totally to blame here. I strongly suspect that Sinsofsky pushed very hard to make sure every new operating system initiative would come under his division. I think this is why Windows Phone is called Windows Phone too, even though it would probably by much much easier to market under its own brand.
    • yulaow 13y ago
      They need developers and they need to make people feel ok with the new interface before buying a tablet. So it made sense to put the same UI in windows 8 so people can try it and then feel comfortable and buy a related tablet. Problem is: the most of the people hate metro ui, the medium user can get the difference between w8 and wRT and really a incredible small part of the total windows developers joined the ship of winRT/JS and no one of the "main" contributors
• ternaryoperator 13y ago
  It's a shame b/c the Surface Pro (not the RT) is a great device. It strikes the right balance between a tablet and a laptop. In addition, it runs all Windows apps. I think the biggest problems (and likely the chief barriers to better sales) are the price and the short battery life when compared with other tablets.
  • ctdonath 13y ago
    In addition, it runs all Windows apps. There are a LOT of people who just want to get away from Windows. Macs still resemble Windows PCs so people expect crossover or compatibility somehow; tablets cross a psychological barrier helping people really leave the ecosystem.
  • MBCook 13y ago
    The Surface Pro was really kind of cursed. It came out after the Surface RT, which was a confusing product that didn't meet expectations or match up well to the competition. It also became something of a poster child for Windows 8 which received a ton of negative press. Finally the decision to call them both Surface and have them be indistinguishable in hardware & interface was designed to create confusion.
• dmfdmf 13y ago
  I see two big issues with Microsoft. First is that they have drifted away from a basic principle that made Bill Gates a billionaire -- backwards compatibility, or at least when backwards compatibility had to be broken there was clear benefits and an upgrade or conversion path to ease the pain. Surface RT, Surface Pro, Win8, etc are just confusing choices to any customers thinking of a purchase. I'd rather just buy an iPad, quite frankly. Secondly, Microsoft is still bitter and stinging over the old "I'm a Mac, I'm a PC" commercials. Those were epic, hilarious commercials that stuck a cord with users and that MS never countered. They should have blasted back with the truth -- yeah, Macs are cool but when you want to get real work done you use Windows. Instead they were silently stewing with resentment. Surface and the Surface marketing campaign can be summed up as MS's attempt to show the world that they are "cool" too just like Apple. But as most people know, trying to be cool is uncool and everyone laughs at the attempt. MS needs to embrace and be proud of their identity and stop trying to me-too Apple and just build products that work and run the world.
  • webwielder 13y ago
    >They should have blasted back with the truth -- yeah, Macs are cool but when you want to get real work done you use Windows. You have a funny definition of truth.
    • dmfdmf 13y ago
      The reality is most businesses and 85-90% (? I don't know the latest stats off the top of my head) of computers are still running Windows.
      • seanmcdirmid 13y ago
        computers or PCs? Those would be very different numbers if we were talking about all consumer devices that compute.
        • dmfdmf 13y ago
          That is a fair point and what MS is really afraid of but consumer device are not going to replace desktop computers, at least in my opinion.
• bwang29 13y ago
  The majority of PC users are probably cooperate users, gamers, non technical casual users, developers. Windows RT provide very small value to these people.
• lucb1e 13y ago
  "If at first you don't succeed, you're about average" comes to mind. I personally think Windows 8 is the core of all issues. Many hate the OS, justly or not, and that causes any device with Windows 8 on it to sell a lot less units. They're actually lucky selling as many Windows 8 licenses as they have, even I got two and use neither (they forced it down my throat while buying new hardware, even though the OEM license states that there must be a license return policy, which HP just violates). The ads for the Surface are pretty neat I think, and others I heard about it thought the same, but meanwhile nobody is buying. Apple somehow got people to use iPad as synonym for the word tablet. Microsoft really has to show an advantage over the iPad or a laptop, but so far nobody has seen any.
• stickhandle 13y ago
  Let's face it, this is the MS way. Most of the time, anyway. Office products were inferior once. Same goes for search, xbox, touch devices. MS iterates, sometimes slowly, and plays the tortoise. It doesn't always work (zune, bing), but sometimes it does (word, excel, xbox). The only caveat is the competition this time is Apple and Google. That's tougher sledding than Sony, Nintendo, Corel, Lotus, Novell et al. Then again, they've done battle with IBM, Oracle, and a different version of Apple in the past and found wins. Never write MS off on v1.
• ww520 13y ago
  They have priced the devices way too high. Microsoft has been mostly successful before when started with low end products to build market share, got market feedback, and iterated over the years to iron out the kinks, and then moved up the chain eventually. Apple has been in the premium product game for their whole life and know how it work. Microsoft needs to stick with their strength and avoid their weakness.
  • barista 13y ago
    They priced it competitively with the product they were fighting. But now its prices way less than iPad. iPad - $500 Surface RT - $350
    • ww520 13y ago
      IPad is already in its N-th iteration. What was Microsoft thinking that it could pitch an alpha/beta product against Apple's mature product head-to-head? Pricing it low initially gives value to the users and they would be more forgiving of its shortcomings. It at least creates market share and momentum. Priced it high initially and then low it is the worse marketing approach. The initial high price kills market penetration, and the subsequent price slash creates a sense of desperation and signals something is wrong with the product.
• barista 13y ago
  iPad sales in a year were close to 7 million http://www.businessinsider.com/chart-of-the-day-ipad-estimate-sales-vs-iphone-ipod-nintendo-2010-4 http://www.businessinsider.com/chart-of-the-day-ipad-estimat.... RT has sold close to 2 million in a year.
  • pedalpete 13y ago
    I kinda like what those numbers say, except that when the ipad was launched tablets were a new thing. People weren't sure what they would use them for, and were wary of making the purchase. Apple educated the market.
• brudgers 13y ago
  Suppose Microsoft was a pharmaceutical company. Would this be news? Merck had nearly $7 billion in operating losses last year on $48 billion in revenue. Microsoft had $22 billion in net revenue on $78 billion in income. The write down affected profits by less than 5%. Surface is a research project - like Kin before it. Microsoft put several million Windows RT devices in the field in less than nine months. They will probably put another several million in the field in the next few. That's a lot of stinking data, a lot cheaper than clinical development of a new new drug, and almost certain to be repaid over the long term because they've got Windows running on ARM and while there's the normal calls for Ballmer - Microsoft's second largest stockholder after his college buddy Gates - to fire himself, there are not widespread reports of technical failure from the field. On top of all that, every device they sell recoups part of their sunk cost in R&D. Microsoft built a reference device for a new operating system. They have collected data to help their hardware partners develop more devices. They have collected data upon which to build a roadmap for Windows on ARM. Microsoft does not live and die quarter to quarter with Wall Street because the founder and first Business Manager still hold enough stock to call the shots. They also realized well over a billion dollars of wealth apiece last year from Microsoft's operations. Both the numbers and the standard journalistic refrain that Microsoft is failing are pretty much the same as last year and the year before etc. It's just another news cycle.
  • wilg 13y ago
    Yeah, but they sure spent a lot of money and have a lot of data on a "reference device" that nobody wants to buy.
    • ximeng 13y ago
      I have a surface pro and am pretty happy with it. I compared to a lot of rival tablets and products and it was basically the only one with the combination of features I want: supports extra screen, keyboard, runs Windows / Office apps so I don't need separate device for work, 1080p, touch screen (stylus a bonus). Battery life isn't a major issue for me as I'm plugged in most of the time and it lasts more than double my previous laptop unplugged. It's price competitive with laptops of a similar specification but more flexible. Surface RT I don't consider competitive. But the Pro is the reference device for Windows 8 and nobody was doing it as well when I looked. They should have a market position there at least. I think Windows 8 is a bit misguided in design - it's a step backwards not being able to resize apps on a laptop resolution screen, but using it as traditional windows works fine.
• crazygringo 13y ago
  My simple, genuine question is: how did this happen? I mean, Microsoft has huge resources, and presumably does testing with focus groups, etc. They must test these devices with potential consumers, and it's not rocket science to do some sampling to determine how many units will sell, to get a very rough ballpark figure. How could Microsoft mis-estimate the market on a scale of this magnitude? This isn't just a random extra camera or cellphone model that maybe doesn't sell so well. I honestly don't understand how a company this large, could get it this wrong.
  • tjdetwiler 13y ago
    Hubris
  • jasonkolb 13y ago
    Well, its CEO refuses to even let rival products in his home, for starters. Talk about a well-insulated bubble, that's a great way to lose touch with customers.
    • azakai 13y ago
      Wasn't that Gates, not Ballmer?
      • veidr 13y ago
        No, that's Ballmer: http://money.cnn.com/magazines/fortune/fortune_archive/2006/04/03/8373041/ http://money.cnn.com/magazines/fortune/fortune_archive/2006/...
        • farnsworth 13y ago
          7 years ago... in a light-hearted response to a stupid interview question...
    • deleted 13y ago
      [deleted]
  • 13y ago
• HashThis 13y ago
  Yikes. They better turn this around quickly, or they may no longer be the country's best technology company.
• bhauer 13y ago
  I use my Surface Pro nearly every day, so this sort of report makes me feel that: a. I am an oddball (probably true). b. Microsoft's marketing for the Surface sucks (generally accepted as objectively true). c. The Surface was a weak attempt (A subjective matter. I like mine, but there is lot of room for improvement. Ask me if you want more details). The pundits have said their pieces, and I have written my own thoughts/rant about Microsoft's current unenviable situation [1]. But as a user of a Surface Pro, I'll offer up some of my random thoughts here as well. Hardware-wise, the Surface Pro is one generation too early; it needs a Haswell CPU in order to provide user-friendly battery life and perhaps shed some weight. To meet their launch timing objectives, Microsoft had no choice but to use Ivy Bridge. As it was, the Pro was disturbingly late to market compared to the RT. The RT's flailing in the market muted the thunder of the Pro release. The market's response to the lackluster RT had already set in, casting a long shadow over the Pro. When the Pro finally arrived, less technically-savvy consumers were already disinterested. Even us tech folks were lukewarm despite the Pro being quite nice even if you use it as merely an ultrabook. If Surface 2 is entirely Haswell (that is, both entry-level and Pro-level are low-TDP x86), and nothing else changes, I think the hardware will be just shy of superb. As it is, the Surface Pro packs ultrabook performance in a tablet-like form factor. Browsing the web, writing code, working with e-mails, Twitter, IM, IRC, the works--it's all as fast and smooth as the workstation I have at the office (a first-generation i7). It makes conventional tablets seem alarmingly slow and limited. On the other hand, because the Pro is heavy and encumbered by a hungry CPU, it's not as versatile as conventional tablets. I think it is now evident to most that Windows RT should be unshackled. Microsoft was apparently worried about cannibalism, but that worry is overshadowed by an utter dearth of sales. Microsoft should strongly shun their baked-in culture of capriciously angering consumers. They know arbitrary software limitations will upset consumers but they do it anyway. Stop that. Personally, my computing lifestyle is not especially amenable to "computing device addition," and yet I half-reluctantly acquired a Surface Pro because I wanted portable computing capability and had never owned a high-end laptop. My tablets left me wanting more, but laptops never quite fit my desires (too large, too low-DPI). Plus, I am a bit of a Microsoft fanboy, I'll admit it. Rather than adding another computing device, I would prefer a model where all my applications run on a compute server I own and operate (my workstation at home would suffice), and all of my devices connect to views of those applications. Adding a Surface Pro gives me yet another first-class computing device to manage. So now I have all of the following devices in my life wanting me to manage applications, manage data, manage configuration, manage presence, manage and synchronize state: my home workstation, my office workstation, my media PC, my phone, my Surface Pro, and my other tablets. It's frustrating to add another device to the pile with no change to the underlying model of working with devices. I feel Microsoft is fairly uniquely positioned to present a unified computing model to users that Google and Apple seem reluctant to provide due to cloud stickiness (that is, a desire to solve application continuity and data continuity by moving applications to their public cloud rather than user-owned/managed applications). Microsoft is chasing the Google and Apple model and so far they are failing. As a Surface Pro owner, and Windows user on my workstation, I'd like to see Microsoft change course to provide a unified computing model focused on my devices working in a master-slave configuration over (tunneled) private networks. Frankly, I want my Surface Pro to be a touch and keyboard-enabled, high-DPI, remote terminal to responsive (in the web-app sense of the word) application instances running on my workstation. That way, it's not a first-class computing device with all of the encumbering nags that entails. I want a subservient tablet that is just one view, one set of input and output devices, for my singular computing. Finally, as I included in the linked rant, I believe a massive problem for Microsoft is the insanity of MSDN pricing. I strongly believe that their pricing model is actively hostile to developers, especially in this time of indie-oriented application development. They may have all sorts of special business programs that provide exceptions to the standard pricing--I honestly don't know--but the standard pricing stares you in the face and says, "Go away, Windows development is not for you." That sucks. [1] http://tiamat.tsotech.com/microsoft http://tiamat.tsotech.com/microsoft
• yuhong 13y ago
  I think even Thurrott don't recommend the Surface RT: http://winsupersite.com/windows-rt/surface-rt-350-time-buy http://winsupersite.com/windows-rt/surface-rt-350-time-buy
• kylebgorman 13y ago
  I know just where to put all those extra Surfaces nobody wants: http://en.wikipedia.org/wiki/Atari_video_game_burial http://en.wikipedia.org/wiki/Atari_video_game_burial
• milhous 13y ago
  I'm in the Apple camp, but I think the crazy rumor that Surface was going to go on sale for $199 disappointed a lot of people. Definitely would've bought one at that price. Heck, I would've stood in line at a Microsoft store on launch day.
• damian2000 13y ago
  MS should consider going back to being just a software company, as IBM did when they sold off their PC division to Lenovo. Their key strength is still their business software and desktop/server OS (Windows).
• kabdib 13y ago
  The RT was doomed when the priced it too high, by about a hundred dollars. I've heard this was because the COGs were quite high, because Apple had a bunch of the components market sewn up. I think the base model RT might have had a chance at $350.
• pqdbr 13y ago
  I'm amazed by reading all these comments that nobody touched on the lacking 3G issue. Last time I checked, Surface was supposed to be a tablet, to compete with iPad and all. What were they thinking when they released it without offering a 3G option, even at a premium price ?
  • jonaford 13y ago
    Great point. This was the actual reason I didn't buy a surface.
• throwawaykf02 13y ago
  Wait, so assuming any reasonable ratio of Surface to Surface Pro sales, they still sold more than a million devices? That's... more than I expected. Still far short of the "few million" they expected to sell, but a million seems respectable for the first year of a late entry in a hypercompetitive market, no?
• jonaford 13y ago
  If they had simply targeted RT at corporates and Pro at consumers this would have all turned out very differently.
• geuis 13y ago
  Took the Xbox years to be profitable. Microsoft is turning in a new direction and its going to take a while before they get onto their new course. http://septemberlove.org/wp-content/uploads/2012/05/turning-ship.jpg http://septemberlove.org/wp-content/uploads/2012/05/turning-... Big ships don't turn on a dime.
• corporalagumbo 13y ago
  >fondleslabs Ugh, I HATE this word. Why do people use it? To make themselves feel clever and superior?
• skc 13y ago
  I think they'll be alright in the end, Microsoft tends to iterate their products in the classic if infuriating way. I expect v2 to be good and v3 to be pretty stellar. The question is time. Off topic, does anyone have Chromebook Pixel sales figures yet?