Surface RT Costs Microsoft $900M

Low Sales, Price Cuts Signal Trouble for Tablet

Comic, Industry News, Mobile Devices Comments (1)

(Comic via Matt Forcum)

Microsoft took one on the chin last week when the company announced they had lost $900 million on the Surface RT.

With quarterly revenue of $19.90 billion and diluted earnings per share at $0.59, Microsoft said in a release that the “financial results include a $900 million charge, or a $0.07 per share impact, related to Surface RT inventory adjustments.”

In other words, the company hasn’t sold as many as it had hoped.

Just days before, Microsoft shaved $150 off the original price. As a result, the 32GB version costs $349, while the 64GB model is now $499, the original price of the 32GB version.

Somewhere between 900,000 (IDC) and 1.5 million (Bloomberg) devices have been sold since the tablet’s debut last fall, depending on which source is consulted.

“What is surprising, however, is that the company so grossly overestimated demand for the product that it apparently had its manufacturers build many millions, such that it would then have to write down the value of millions of units of unsold Surface RT stock,” wrote Ars Technica’s Peter Bright. “That’s a spectacular misjudgment.”

The technology giant has recently launched a new ad campaign for the product focusing on features it has that the iPad lacks, such as SD cards, a kickstand, simultaneous multitasking, and of course, a much lower starting price.

To see the new ads, check them out on the Surface YouTube channel.

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Adam Bockler is the communications manager for Float, responsible for all of Float's marketing initiatives. In addition, Adam is a certified DDP Yoga Level 1 instructor, a certified personal trainer, a martial arts instructor, and a graduate of the Black and Brave Wrestling Academy.

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On July 23, 2013
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One Response to Surface RT Costs Microsoft $900M

  1. Jason Haag says:

    I can’t believe they didn’t learn from HP’s mistakes. I have seen the surface RT and the surface pro. I’m waiting for the Pro price to come down. I actually like the UI and I think Microsoft will only start to gain more of the market share if their prices come down. I could easily spend $200 for the RT and up to $600 for the pro, but no more than that.

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