Microsoft’s Surface sales figures are in, and they’re a total disaster

In Microsft’s “annual 10-K report to the US Securities and Exchange Commission (SEC), published on Tuesday, the software giant reported actual Surface revenue figures for the first time – and they’re not good,” Neil McAllister reports for The Register. “According to the report, Microsoft’s total Surface revenue for all of fiscal 2013 amounted to just $853m. That’s nearly $50m less than the $900m charge Redmond took when it discounted its remaining Surface RT inventory by $150 per box.”

“And that’s not all. That $900m writedown was related to Surface RT only, but the $853m revenue figure includes sales of Surface RT and Surface Pro combined,” McAllister reports. “Further down in its 10-K filing, Redmond reports that it upped its sales and marketing budget for the Windows Division in 2013 by a jaw-dropping $1bn, which included an $898m increase in advertising costs ‘associated primarily with Windows 8 and Surface.’ Got that? Microsoft spent more in a single year advertising the Windows 8 and Surface launches than it took in from Surface sales that same year.”

McAllister reports, “It’s cruel to compare the struggling Surface to Apple’s iPad line, but the numbers don’t lie. Apple sold 57 million iPads in the same period, meaning it could have sold them for just $15 apiece and still matched Microsoft’s tablet revenue figure.”

Read more in the full article here.

MacDailyNews Take: It’s not cruel, it’s luscious schadenfreude! Click!

Oh, yeah: Rounding error.

For as long as it takes!

[Thanks to MacDailyNews Readers “Tayster” and “psydocdwennis” for the heads up.]

Related articles:
Microsoft earnings, sales badly miss expectations; $900 million inventory writedown on Surface tablet flop – July 18, 2013
Gartner: Apple to overtake Microsoft in total OS sales in 2015 – June 25, 2013
Apple Macintosh owns 45% of PC market profits – April 16, 2013
Steve Jobs’ revenge – April 12, 2013
Apple Macintosh on the rise as Windows PC market plummets – April 11, 2013
Gartner: PC Market posts 11.2 percent decline in Q113; Apple Mac sales up 7.4 percent in U.S. – April 10, 2013
IDC: PC shipments post the steepest decline ever in a single quarter, down 13.9% in Q113 – April 10, 2013

69 Comments

    1. The Microsoft Story(working title: The Ship that Sank)
      Location: palatial office.
      Scene#1 
      1.1 Medium p.o.v longshot opens on the plush, heavy, executive door bursting open, followed by a wide eyed fearful  lickspittle being thrust into the room. Jump cut to..
      1.2 Close up of sweating face rising to fill the frame…
                **NOW WHAT!**
      Off shot…
                   **Cap’n…th…there’s an investor uprising storm a’comin**
      Violent cut to…
      1.3 P.O.V long shot of multiple chairs crashing against a hurriedly closing door. Pan back. Camera lingers-long on the broken, tangled heap of chairs / cuts to…
      1.4 Wideangle shot of slumped figure dwarfed by a huge desk / tracking in ’til his puzzled eyes fill the frame / long fade in to…
      1.5 Hectic scene of glories-past with voiceover/two words/uttered-childlike…
                  **What happened…..**

      [apologies to Citizen Kane]

    1. Yeah like carob chip gluten free cookies, you see one and think ooooh… that looks like it might be good.
      That is, until you actually try one, then you are looking for a napkin to spit it into because it’s too horrible to swallow.

      You can polish a turd till it’s shiny, but it is still just shit, isn’t it?

  1. Surface is supposed to be the showcase for Windows 8. It’s obvious that NO ONE likes Windows 8. Surface being a “total disaster” is a symptom of Microsoft’s HUGE ongoing problem with Windows 8.

    If Surface is a disaster, then Windows 8 is a catastrophe for Microsoft. Ballmer basically killed his cash cow.

    1. It takes real anti-CEO skill to kill off a sacred cash cow. You’d have to be the bellowing, chair-throwing sales or marketing guy to be able to do this, uh…,eh, oops! I wonder if Microsoft’s bank account has to get down to a couple hundred bucks before Bill Gates finally notices his company is in deep doo-doo.

    2. MS has its claws so deeply into corporate world that even if they decided to return to DOS the corporate world would have to follow. It’s the consumer market where MS is having great problems. Why would a consumer buy a $1000 Surface when they can get a $500 touch screen laptop both running full Windows 8?

  2. From CNBC, May, 2013
    “In an appearance on CNBC, the Microsoft chairman says that iPad users are suffering and need the things that the Surface can bring.”

    “But a lot of those users are frustrated because they can’t type, they can’t create documents, they don’t have Office there,” he said.
    Bill Gates – 5/6/2013

    And Bill you are an out of touch idiot, Money doesn’t make you smart but as history has shown, it sure can and does make those with it Dumb.

    Lets not forget Ballmer “the sales guy”.

    For as long as it takes…

        1. Probably closer to 2 million. The GeekWire report, just like many other people, equate retail price on the street with revenues by the branded manufacturer. GeekWire figured a $500 average street price, which seems close and was my guess before wading down here into the comments section to follow your GeekWire link. But…

          The merchant takes their cut. I’ve been out of the loop for a while on retail markup on computers, but the revenue that goes to Microsoft on a $500 computer (what the first step in the distribution chain pays Microsoft for a Surface) ought to be more like $400; ergo, roughly 2 million units sold.

  3. I have to say this in part because I am an Apple User for over 33 years, so far. I purchased my first real computer, the second model of the Macintosh. the 512K in part because the company I worked for, Xerox, was and Apple distributor in Latin America and they wanted to know if their Employees would be interested in purchasing with the Apple or the IBM XD or XD computer. ( can’t remember which now. I chose the Apple and they took the payment out of my pay each pay period. I mention this because it saddens me to see the self destruction of Microsoft and the of computer makers. Apple needs to have competitors who are competitive in the marketplace. Competitors cause Apple to stay focused and driven by the fear/concern that a competitor will start to erode their base. A company with little or no competition gets fat and lazy and stops trying to be the best they can be for their current customers and their future customers. It is very sad on so many levels.

    1. You are right about a company becoming fat and lazy if they have no competition. MS is the prime example of this and they are on their way out now or will at least be reduced in relativeness like IBM. Apple does need a #2 company to keep pushing them ahead, but not as much as you might think. They seem to push them selves onward.

      1. This cliché about the supposed need for competition is repeated over and over. I don’t think it’s true… not always.

        There’s no “company” to become fat and lazy. There are people.

        Some people need fear to stay focussed. Some need competition to not stagnate. And some others produce excellence, because that is what gives them a deep and profound satisfaction. That kind of people will have excellent lives and produce excellent results, whether they have competition or not. To repeat another cliché, that’s just who they are.

        1. You are right, because Apple did not need any competition to do its best (most important) creative work.

          Who was Apple competing against when they created the original iPod? There were some digital music player before iPod, but most of the iPod competition came AFTER iPod was released and became a success. Competition did not create iPod

          At the time Apple released the iPhone, it was a new venture in a new market; Apple intentionally ignored existing smartphone design to create iPhone. The competition that existed when iPhone was released are all gone now, except for RIM (which is almost gone). iPhone’s current only real completion (the Android collective) came AFTER iPhone was released. Competition did not create iPhone.

          Same with iPad. There were existing tablet computers, but they all became obsolete overnight. Competition did not create iPad.

          The only way Apple’s so-called “competition” affects Apple is AFTER Apple has done the most important (secret) work of creating the original product. The rest of the work is just “maintenance.” 🙂

          1. I’m sorry but you seem not to grasp the facts. There where several MP3 players and when Apple introduced the iPod it was deemed uncompetitive. Same is true of iPhone. Hence Ballmer’s now famous statement. MS had tablets out for nearly a decade before iPad.
            Apple very much so went head to head with established competitors in each category. Even back in Apple II days they where not quite alone. When the Mac came out as Lisa it wasn’t competitive. Revamped and reintroduced as Mac it changed the world.
            You can legitimately state that as Apple went into categories they have often proved the competition no match. And it has rarely been a clear technical advantage. What Apple offers is more than the sum of its parts. This is what unnerves the competition and freaks the geeks out.
            We now have a clear vision of the ecosystem but until the AppStore no one else did. Even then most believed and many still do that Apple was pushed to go there unwillingly.
            Apple often releases half way products but never half baked one.
            Look at the often panned Cube, as the Mini it sure has legs. On and on Apple marches ahead competing for our $. Do they need worthy competitors? Seems maybe not but competitors none the less have been part of Apple’s landscape for decades.
            What pushes and drives Apple to excellence? Inspiration, passion, competition. A differing amount of each at any turn Is what the evidence suggests. The one thing that seems not to drive Apple in a major way is shareholder value. And yet look how that has played out as well.
            Apple it just works, for me

            1. There may have been MP3 players before iPod, but none those early players were relevant “competition.” The actual competition for iPod came LATER, when the competition copied iPod. Competition was not needed to create iPod.

              There were certainly smartphones on the market when iPhone was released. But Apple did something completely different, so competition did not inspire the creation of iPhone. And that early competition (Palm OS, WebOS, Windows Mobile, and Symbian) disappeared one at a time, soon to be followed by BlackBerry. iPhone’s actual competition today are the phone makers who use Android, and that all came LATER, when the competition copied iPhone. Competition was not needed to create iPhone.

              There were tablet computers before iPad, some ten years before iPad. But again, iPad was something completely new. iPad’s current competition are just iPad copies. Competition was not needed to create iPad.

              Competition was not the reason for the creation of the iTunes (Music) Store. It was created as a value-added service for Apple’s hardware customers, to help sell more hardware.

              And of course, you can go back to the Mac as another example of Apple doing what it does regardless what the competition is doing. Apple did not design a better command line computer, Apple designed the first successful GUI-based computer. Earlier GUI-based systems (including Apple’s own Lisa) may have provided inspiration, but they were in no way “competition.”

              Those examples you gave of the Cube and Mac mini… That is “maintenance” after the original product (the original Mac) has been released. And that’s the ONLY way competition affects Apple, in maintaining the product line AFTER the competition starts to copy it. But the more important work of secretly creating the original “1.0” product has already been completed by that point, and that is where competition has little impact.

        2. Like the musicians that played until they slipped off of the deck of the Titanic I am sure that there are good and dedicated people at MS. However as long as Ballmer is in charge they will never rise to their potential.

          Conversely Steve left a legacy at Apple that welcomes and rewards the type of folks you mentioned in your last paragraph. Well said.

        3. Seems to me that Apple figured out the trick of competing with itself – a great skill when the competition is so often mediocre. They keep beating their records, making products with longer battery life, thinner, easier to use, and more useful. They launch new product categories (like iPads, iPhones, and Minis) apparently showing no fear as new product categories replace existing sales (like the Macs, iPods, and non-minis).

          Self motivation is a real thing, a very compelling and sustainable drive for excellence. Even in markets where the most successful products are the best Apple could produce recently, they insist on making better products.

        4. Seamus is only confirming what Apple has always held true. That they don’t “compete” against (insert other vendor name here). That was what they said throughout the 80’s.

          They make “insanely great products” that sell themselves.

  4. according to the article the 898 million was an INCREASE to the ad budget (i.e it’s an addition to the big amounts it normally spends).
    (the last comparison stats I saw was in 2009 where Fortune magazine showed Msft spending 3 times Apple’s ad budget. I guess today it might be even more ? )

    No wonder newspapers, TV channels, blogs etc don’t like criticizing Msft as they all want a share of that giant Ad budget.

    Not surprisingly I saw on TV some time back workers threatening suicide on top of the Foxconn factory building msft products (they were going to close the Xbox line) described as “Workers threatening suicide at APPLE supplier Foxconn”.

    Interestingly Asymco a few months back said Samsung spent 5.3 Billion on Ads and Marketing.

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