Microsoft Surface officially a flop, brings in just $853m in revenue

By on July 31, 2013, 10:15 AM
tablet, windows 8, revenue, microsoft surface, windows rt, surface rt, surface pro, flop

Microsoft has been tight-lipped about shipping numbers for its Surface tablet, but for the first time the company is sharing just how much money the devices have brought in so far: $853 million. That's less than both their write-down for unsold Surface RT units ($900 million) and the advertising costs associated with the tablet alongside Windows 8 ($898 million). The figure covers sales for both Surface tablets, the Surface RT and Surface Pro, for a period from their launch in October 2012 to the end of June this year.

For most companies, $853 million is a significant amount. But when it comes to Microsoft it's worth noting that the Windows division as a whole (including Surface sales) brought in $19.2 billion.

Additionally, the Server and Tools brought $20.3 billion, the Business division which accounts for Office brought $24.7 billion, Entertainment and Devices including Xbox and Windows Phone brought $10.1 billion, and even their Online Services division that reported a loss managed $3.2 billion in revenue.

Overall, out of the total revenue of $77.8 billion for the year, sales of Surface tablets accounted for just 1% of total revenue. Combined with the significant write-down, the fact CEO Steve Ballmer claimed the company built too many Surface RT units, and that the Surface pulled in less revenue than was spent on advertising, it's safe to say Microsoft's first foray into producing tablets was a flop.

That said, Microsoft appears to be developing a successor to the Surface RT, likely with a Qualcomm Snapdragon 800 SoC inside and running Windows RT 8.1 out of the box. It would make sense for Microsoft to release this tablet towards the end of the year, after the current model has been on sale for a year, but neither the tablet or its release date have been confirmed.




User Comments: 25

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JC713 JC713 said:

Maybe they will bring back the start menu.

2 people like this | Cueto_99 said:

It was expected... People don't like Windows Apps... most of them are laggy, slow, not very innovative and only a port of android or iOS apps... The only real benefit is the office package...

2 people like this | amstech amstech, TechSpot Enthusiast, said:

Where are all those Microsoft supporters to get on my case about poking fun at big M for making ******* knee-jerk/copy-cat spin-off decisions one after another; and thinking they can sell whatever they want because it says "Microsoft" on it?

Dislodge the foot from your mouth before replying please.

2 people like this | paynetrain007 said:

I have a pro, and it is the greatest thing since sliced bread. At my company (I work at a college) we have begun providing RT's to our admissions travelers and other people who travel for the school. They are very effective at dong everything they need. VPN connections work, as well as Citrix Receiver, Office Apps make it great for business With New features in server 2012 R2 (in Release Preview) We can get domain like control over the devices. If stupid developers would get on board and realize what Microsoft is offering as a system is better then iOS, it would be perfect. The app market is the only thing missing.

1 person liked this | chipkempston chipkempston said:

All the speculation and simplistic explanations for the performance of the PC / Tablet market are premature. Yes, there are some serious issues with Surface, but Microsoft didn't get to be a multi-billion dollar company without making some poor decisions along the way and then correcting them and still coming out on top. I'm no MS fanboy, but I don't think all the doom and gloom is warranted yet.

wastedkill said:

If a new surface pro costs less than £500 with a keyboard I will get one as £720 for a surface pro than a extra £120 for a "non-special" keyboard is pathetic its beyond a joke I can not understand what stupid employee thought of such a price no wonder they aren't selling you have to be beyond brain dead with a IQ of 0 to buy a surface pro for that price.

Guest said:

Only $853 MILLION.

Only.

$853 million.

In less than a year?

What a flop!

There are corporations that would be thrilled with $853 million in sales, total, this is for one product.

PANIC!!!

1 person liked this | wastedkill said:

Only $853 MILLION.

Only.

$853 million.

In less than a year?

What a flop!

There are corporations that would be thrilled with $853 million in sales, total, this is for one product.

PANIC!!!

tell me more how corporations would be thrilled with $853 million in sales with a $900+million loss.. from 1 product... go on... oh ye thats it they wouldn't would they come on man....

1 person liked this | MilwaukeeMike said:

This is their first tablet. We have to give it some time for the app market to catch up before we can decide if this is the next Xbox or the next Zune.

GhostRyder GhostRyder said:

I didn't like the rt too much, but I love my surface pro. It's a great device!!!

wastedkill said:

I didn't like the rt too much, but I love my surface pro. It's a great device!!!

It looks great but its too expensive £720 for the tablet itself than a extra £120 for a keyboard/cover ... I don't seem to earn enough to justify the cost :/ £8k a year isn't much ya know!

ikesmasher said:

Only $853 MILLION.

Only.

$853 million.

In less than a year?

What a flop!

There are corporations that would be thrilled with $853 million in sales, total, this is for one product.

PANIC!!!

Revenue is not the same thing as profit. Part of business.

Railman said:

I wonder how much the R&D came to? Was it included in the write off?

1 person liked this | Guest said:

This is their first tablet. We have to give it some time for the app market to catch up before we can decide if this is the next Xbox or the next Zune.

I agree, Microsoft hasn't given up on Surface yet. If they keep on working on that app ecosystem and perhaps work on the price ($100+ for a keyboard?) they can probably see more favorable results, but it'll probably take time.

TheBigFatClown said:

I didn't like the rt too much, but I love my surface pro. It's a great device!!!

I have some birdseed for you.

bexwhitt said:

The whole point of the modern UI was for one interface for all devices, as the touch devices have bombed for Microsoft can we have the tried and mostly trusted interface back?

1 person liked this | cliffordcooley cliffordcooley, TechSpot Paladin, said:

I'm willing to bet, this had nothing to do with hardware used in the Surface. And personally, I don't think the prices are a big let down either. It is more of a combination of elements, that make the Surface an unknown product on the market. As long as MS doesn't throw in the towel, the next Surface tablet may survive.

Hallo104 said:

I have an IPad and an IPhone but I have a PC as a laptop. Although I enjoy the story of Steve Jobs, I am no Apple fan boy.

In saying that, do you think Microsoft lacks a vision and ability to carry out that vision? It seems like Apple and Google are far more innovative than MSFT. Are they too comfortable with Windows and Office not forcing their hand in innovation? Does Ballmer need to go?

Also, I am going on a limb here but do you think Elon Musk would be a good fit for MSFT? He seems to have the golden touch? Although I am unsure how well he could run a $77 billion dollar company.

Guest said:

"Microsoft's first foray into producing tablets was a flop"

Their second too. The first being the Microsoft Tablet PC back in 2002.

1 person liked this | captaincranky captaincranky, TechSpot Addict, said:

Also, I am going on a limb here but do you think Elon Musk would be a good fit for MSFT? He seems to have the golden touch? Although I am unsure how well he could run a $77 billion dollar company.
Wow, that would be like a duel of the titans. You get him and Steve Ballmer together, and see which one could talk a hot air balloon furthest off the ground, and put the winner in charge of M$.(*)

Of course, Elon Musk would probably insist on relocating Microsoft 's R&D department to Mars. But, given a couple of decades to get his bearings, he'd probably get over himself, or explode trying.

(*) Other suggestion for this "winner take all, survival of the fittest death match".:

1. A grand fart off. (Your opponent causes you to gag, you forfeit).

2. A lying contest

3. Mock sumo wrestling with, "The Surface Tablet Dance Troupe" as cheerleaders.

wiyosaya said:

Personally, I think they are priced too high. Drop the price by 50%, and I think they would sell more.

p@--- p@--- said:

Fire sale ... make it 150$ bucks or under and ill buy one , then ill wipe that shit os off it and put android on it ..

cliffordcooley cliffordcooley, TechSpot Paladin, said:

If you want a tablet with Android on it, why both with purchasing Surface?

p@--- p@--- said:

I like to do things I'm told not to , its not necessarily android that needs to be on this thing have you ever actually used 8.1 metro , its ungodly the worst thing I've ever seen.... its supposed to be best on a tablet interface but its still awful .. id take win 7 touch or win xp tablet edition on this thing first before 8.1 they need to polish that turd ...

fermier fermier said:

Re: greatest thing since sliced bread

wow, that's clever. NOT

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