“Microsoft continued to lose money on its Surface tablets throughout its just-concluded 2014 fiscal year, adding hundreds of millions of dollars in red ink and boosting total losses to $1.7 billion since the device’s 2012 launch,” Gregg Keizer reports for Computerworld.
“According to the 8-K statement filed with the U.S. Securities and Exchange Commission (SEC) on July 22, the Surface posted revenue of $409 million for the quarter that ended June 30. But unlike the two quarters prior, Microsoft did not reveal the cost of revenue associated with the Surface for the period,” Keizer reports. “Without a cost of revenue figure, it is impossible to calculate a precise gross margin, a rough measurement of profit. However, using information in the 10-K that Microsoft filed last Friday, along with data from earlier reports, it is possible to estimate Surface cost of revenue.”
“Calculations by Computerworld show that the Surface’s cost of revenue for the June quarter was $772 million. With revenue of $409 million, that put the tablet in the red to the tune of $363 million, the largest one-quarter loss for the Surface since Microsoft began providing quarterly revenue numbers,” Keizer reports. “Since the Surface’s sales debut, Microsoft has lost $1.73 billion on the new hardware.”
Read more in the full article here.
MacDailyNews Take: Microsoft’s Surface is the grift that keeps on grifting. 🙂
Related articles:
Buffalo Bills coach Doug Marrone says his Microsoft Surface tablet ‘didn’t work’ for portion of game – August 4, 2014
Beleaguered Microsoft’s Windows 8’s uptake falls again, now slower than Vista flop – August 4, 2014
Beleaguered Microsoft employees ‘shell shocked’ at size of layoffs – July 18, 2014
Beleaguered Microsoft’s 18,000 layoffs the beginning of a painful attempt to clean up Ballmer’s mess, says Street – July 17, 2014
Surface Pro 3 shows beleaguered Microsoft is lost – May 22, 2014
Beleaguered Microsoft is a total embarrassment – May 21, 2014
Microsoft’s Surface Pro 3: The toaster-fridge makes its formal debut – May 21, 2014
Surface Pro 3: Microsoft seems more confused about the future than ever – May 21, 2014
Microsoft shows 12-inch ‘Surface Pro 3′ tablet, starts at $800 – May 20, 2014
Surface 3 nails it! No worries for MSFT whatsoever as 5 million software titles dwarfs any other platform. My iPad Air is just a toy compared to my Surface 3! Incredible device to say the least.
how many of those titles optimized to run with touch interface? If they are so good how come they are not selling?
the Surface 3 is like a company duck taping an Old Truck Engine to a limp framed motorcycle and saying “see! see! We’ve got the best of both worlds!” It’s neither a good truck or a good motorcycle.
Live you live based on the restrictions that your toy ipad offers. Stop being an ass and understand what Surface 3 is and move on.
A doorstop? Paperweight? a Surface to put a piece of paper on so I can write?
“understand what Surface 3 is ”
I understand EXACTLY what it is: a piece of crap.
like truck engine motorcycle it does not even go well DOWNHILL…
Msft invented Win 8 NOT because it was good for the consumer or great product but BECAUSE IT WANTED TO PROTECT IT’S CASH COW: WINDOWS DESKTOP. So it got to DESKTOP Division (instead of the MOBILE Win Mo division) to build the MOBILE OS and glue the two mismatched pieces together with duck tape.
Internally they killed of Win Mobile, Win CE, Pink, Kin OS (Danger OS) Zune OS , Courier, original Win phone etc. which was controlled by the MOBILE division (Entertainment and Devices Division ). One of these could have been a BETTER MOBILE OS but Msft needed to protect it’s DESKTOP cash cow.. so users are damned with Motorcyle Truck crap.
On the other had apple HAD THE BALLS and allowed the iPhone to supplant the iPod their biggest money earner (and not have an ‘iPod phone’ but start from scratch) BECAUSE THEY WANTED TO BUILD THE BEST MOBILE EXPERIENCE FOR THE USER.
to amplify the reason why Msft wanted the Desktop Windows to succeed is that they made a lot more money off the Desktop OS than Win Mo.
besides greater volume they also traditionally charged a lot more for the Desktop OS than Win Mo to OEMs (look at the Win Desktop cost to CONSUMERS about $100 for the crippled Home edition upgrade ). Msft had great incentive to somehow keep the Desktop gravy train alive. But all their plans including fees they can charge for the OS seem to be floundering.
When M$ first released Win 3.1 and Office they bundled it to every PC builder to gain market share knowing that upgrade cycle would generate revenue. Their domination of the workplace followed.
Apple have now chosen to give away upgrades on an annual basis and gradually lift the hardware spec needed to run the latest offerings – so you know what it is you are missing before you shell out for a new machine. This model is set to kill the M$ cash cow and Surface is just an irrelevance.
It’s a misshapen laptop that caused them to give their bread and butter OS a multiple personality disorder. That really endeared them to the enterprise sector, didn’t it?
M$ hasn’t made anything since the Xbox worth anything, and that’s being kind to Xbox.
Besides, you’re the ass for calling the iPad a toy and begging for a fight. Just remember, the Surface wouldn’t even exist if Apple hadn’t come up with the iPad first. Microsoft STILL doesn’t get it though because they’re trying to shoehorn their POS into the laptop space, like their old terrible “tablets” from the early 90s.
Same goes for the smartphone industry. I don’t see anything looking like a Blackberry anymore, they all look like iPhone wanna-bes. Apple has been the only company in the last 10 years that has been turning whole industries upside down.
By your definition, Microsoft had already “nailed it” 10 years ago with their ill-fated Tablet PC (and Windows XP Tablet PC Edition). Surface 3 is merely a regurgitation of that effort, albeit with a bit more of a spit shine on the UI. Unfortunately, only about 0.01% of those 5 million titles are actually optimized for a touch interface, which makes the Tablet PC 2.0 (AKA Surface) just as cumbersome to use as it always was. Those who don’t learn from their mistakes are doomed to repeat them – and unfortunately (or fortunately, for Apple), Microsoft has a very short memory.
How do you keep the, needed, expensive cover shut? If you can let us know.
An awkward poor balancing laptop with the keyboard broken off.
Grocery Stores run loss leaders ads all the time ….
Mr. Softy is just running at a loss, no leader!
Now that was sarcasm at its best.
It might have made sense to drop the Pro which is nothing more than a laptop and screws with their primary OS, and concentrate on making Windows for Phone and Windows RT mutually compatible. This would have created a mobile strategy and would involve copying, which is right up their alley.
A mutually compatible phone and tablet OS strategy works well for Apple and Android, why reinvent the wheel, particularly when you’re not very good at inventing?
I disagree,
The Pro is the only PC as a tablet on the market (other than a handful of other Windows based units). While the PC as a tablet is a niche market, at least it’s something Microsoft could own.
The technology for this is rapidly evolving, many of the limitations of the Pro (battery life, size, weight, etc..) will be phased out by newer tech.
The RT version is the one that doesn’t make sense to me. It doesn’t run full Windows and all of its apps, and in order to find success will need to build a full ecosystem which won’t come unless it’s already successful.
Really, Microsoft should kill all of its mobile devices and focus on developing products and services for other platforms.
Well, they already own Nokia so they should pass the ball to them to come up with a compatible tablet. The surface seems to be sinking, so dump that and see what Nokia engineers can do without Redmond interfering too much.
BTW, wasn’t the Surface pro just sort of a guideline for the third party manufacturers MS wanted to sell more copies of Win 8 to? I see advertisements for laptops with detachable keyboards all the time. Are these appreciably different from the surface pro?
Beleaguered Microsoft even failed at running a global monopoly.
They’ll make it up in volume.
If you’re Microsoft, it’s the grift that keeps on grieving.
Couldn’t happen to a nicer liar, thief, psycho, etc…
Surface = Halt and catch Fire.
Microsoft markets it as the best of both worlds, with a dancer that prances around in fantasy land… In the REAL world, it’s a compromised tablet that tries to be a compromised laptop.
Microsoft keeps building their OS for their own ideas of what is “right” rather than finding out from real world users.
As a consequence they produced the Surface, years late, with an OS consumers hate.
Consumers determine the fate of tablets, not the IT departments of large companies. Consumers who get burned once, buy the right product on the rebound.
I like this headline
> Surface damage mounts at beleaguered Microsoft…
The damage from Surface is not just “surface damage.” It runs DEEP.
Selling something below cost to drive another company out of a market only works when the other company is smaller.
I wonder what a Surface would look like if one tried “skipping” it across a pond or lake? A nice smooth stone would skip at least 4 or 5 times …. if you get the right angle. Do you think you’d get at least one good skip on the Surface? 🙂
It all depends on whether or not the kickstand is engaged.
If only Microsoft had read my posts here at MDN, they’d have pulled the plug on Surface in July. What a waste… of money…
Spend Microsoft! Spend SPEND SPEND!
The faster the sooner the better.
Some Surfacesque hilarity from earlier today:
END your Macbook SHAME: Convert it into a Microsoft SURFACE
What does Jony Ive know about designing computers, anyway?
So you’ve spent well over a grand on a new Macbook Pro. How do you fancy spending even more than that amount, all over again, to mod your laptop so it resembles a, er, Microsoft Surface? . . .
Naturally, there’s a funding drive now running on Kickstarter. It may even be successful. So how do the ModBook bods over in Los Angeles propose to desecrate your shiny new Apple product? . . .
To register your interest in destroying that lovely Macbook of yours, pledge some cash at Kickstarter.
With 34 days to go and $51,773 pledged out of a total goal of $150,000 (at the time this story was published), there are clearly people rich enough to do this. (o_O)
Fear not. Gawd-awful Windows 8.1 is NOT inflicted upon the hardware. Instead, it runs a modified version of OS X 10.9 Mavericks. The re-designers attempt to explain what this thing is for at their Kickstarter page. I personally suggest that if you want to write/draw stuff onto your MacBook Pro, you head over to Wacom instead. 😀
Surfacesque?
Good Lord.
We need such new adjectivals like we need Ice-nine in our lemonade.
I thought it was cute as well as descriptive. I’m practicing coming up with new words for an alternative timeline of reality. 😉
Good, because this timeline sucks.
I can’t promise the other timeline turns out all that much better, although I consider it to be lots of fun! An EMP device in every home. Yeah!
i would take Jim Jones Kool-Aid before a surface tab,
good ref to Kurt, by the by….
Wasn’t there a company selling MacBooks modified into tablets on the OWC website? They sold them for quite a while but eventually vanished. My guess is that they converted a few a year but gave up from lack of interest.
Searching around at Archive.org, I note The Axiotron™ Modbook™ being available at OWC in 2008. Here is one example page from that year:
https://web.archive.org/web/20081121223127/http://eshop.macsales.com/shop/ModBook
he Axiotron™ Modbook™ is the first and only tablet Mac® computer solution!
Ideal for: Mobile Users, Business Professionals, Artists, Students, and Technology Leaders.
Designed in California, the Modbook’s condensed form factor and integrated pen-based user
experience make it the ultimate solution for applications and situations where a keyboard
only gets in the way. Click here for current specs and more information from Axiotron
https://web.archive.org/web/20081205163111/http://www.axiotron.com/index.php?id=modbook
Looks like the same company.
The old Axiotron site is dead and gone, but maybe it is the same folks!
It is the same. I found an article on Ars from last year where the author states she’s been following the company since 2007. And it doesn’t hurt that the Modbook name is the same.
From the original article:
“Microsoft was set to launch the smaller-screen Surface Mini alongside the Surface Pro 3 in May, but changed its mind at the last moment, reportedly because it feared the tablet would not sell well.”
So they actually expected any one of these to sell well? Oh to be the fly on the wall during some of those meetings. I’ve been there when management boxes themselves into promoting a cobbled together product that no one outside that room thinks is attractive. Delicious.
Maybe instead of a basketball team, Ballmer should buy all those Surface tablets laying around. Better use of his money, I think.
Gimme a Surface Pro 2 on the cheap and influencal folks will be all over it. It’s a device and OS that really benefits from being actually TRIED.
At the same prices as quality droid tablets and iPads, Surface simply stands no chance, even the ARM versions. Anyone with a fetish for Windows would rather grab normal laptops instead.
Like the song in the M$ surface commercials say..”I want you to be brave”. As in, there is a big risk in taking the Surface as your tablet. Remember the Surface is a touch screen netbook. So it neither does what the iPad Air or Mac Book Air do well. It is a tweener. As such only a small number of people can take advantage of the device.
Surface damage? It seems deeper than that!
Balmer is going to be an awesome owner of the Clippers. I’ll bet he makes the Lakers every bit as happy as he made Apple.
——RM
Plus, we all know that windows users will spend (gasp) $1,500 on a tablet. Because they hate Apple tablets! and Apple gear is too expensive!
The only times I’ve ever seen a Surface are in Best Buy when they first came out, Microsoft commercials and Grey’s Anatomy. Two of those are fictional universes which doesn’t bode well for Microsoft. At least they have security through obscurity. Since you never see them being bought, what thief can find one let alone offload it if they did?