Microsoft (MSFT) overestimated how many Surface RT tablets it could sell and its sales numbers for the device aren’t close to what the vendor wants, according to reports about remarks chief executive Steve Ballmer and chief operating officer Kevin Turner made in an internal town hall meeting last week.
Two weeks ago, Microsoft took a $900 million charge for unsold Surface tablets for Q4 FY 2013, about which Chief Financial Officer Amy Hood said during an earnings call, "I want to be clear: We know we have to do better, particularly on mobile devices." According to a report in The Verge, based on an account in Neowin, in discussing the company’s Q4 results, Ballmer is said to have told Microsoft employees, "We built a few more devices than we could sell."
Ballmer reportedly also confirmed new mobile devices are in the works, likely sporting specification improvements. Early buzz has it that some versions of the next Surface RT will use Qualcomm’s (QCOMM) Snapdragon processor, enabling it to support 4G LTE. Ballmer also is said to have stressed Microsoft’s focus on landing Instagram as an anchor app for Windows Phone.
While Microsoft has been roundly criticized for constricting sales by holding Surface RT back from the channel, lately there have been notable changes in its approach. For example, the vendor recently knocked 30 percent off the price of its Surface RTs, expanded channel distribution and opened stores-within-stores at some 600 Best Buy (BBY) locations.
According to reports, Ballmer tagged Windows 8’s sluggish adoption as a prime culprit in the company’s lagging sales of OS software not only of PCs but also smartphones and tablets. "We're not selling as many Windows devices as we want to," he reportedly said.
As The VAR Guy mentioned last week, Ballmer clearly merits heavy criticism for the company’s $900 million Surface writedown and the to-date failure of its mobile strategy and execution. But, at the same time, with sales growing in strategic areas including Windows Server, SQL Server, System Center and Lync, he deserves a tip of the cap for the company’s successful move to collaboration, virtualization and cloud computing.
Now let’s see if he can fix mobile.