Microsoft Sales Figures Show Surface BombedMicrosoft Sales Figures Show Surface Bombed
As if Microsoft’s (MSFT) $900 million Surface write-down wasn’t convincing enough that the tablet so far has bombed, in 10-K SEC documents filed July 30 the vendor for the first time quantified actual sales for the device. And, the figure isn’t pretty--$853 million in Surface revenue for the period beginning last fall and ending June 30, 2013.
July 31, 2013
As if Microsoft’s (MSFT) $900 million Surface write-down wasn’t convincing enough evidence that the tablet so far has bombed, in 10-K SEC documents filed Tuesday the vendor for the first time quantified actual sales for the device. And, the figure isn’t pretty—$853 million in Surface revenue for the period beginning last fall and ending June 30, 2013.
GeekWire did some deep diving and noted that the $853 million figure doesn’t reflect the $900 million write-down, nor does it include the $898 million Microsoft said in the filing it spent on advertising Surface and Windows 8. Microsoft points out in the filing that Windows sales and marketing expenses spiked by $1 billion during the fiscal year, or some 34 percent.
It all boils down to Microsoft flushing quite a lot of money on Surface so far. How much longer will Microsoft continue to play this losing hand? Quite a long while, if the latest developments are any indication.
Microsoft CEO Steve Ballmer, in recently admitting the vendor overestimated how many Surface RT tablets it could sell, reportedly also confirmed new Surface models 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. While Microsoft has been roundly criticized for constricting sales by holding Surface RT back from the channel, lately it has changed up its distribution profile for the device. 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.
For sure, it’s going to take a lot more than some tweaks to move the Surface sales needle northward. In its SEC filing, Microsoft didn’t reveal actual Surface unit sales numbers, so GeekWire, estimating an average selling price of $500 (likely too low, actually), based on the $853 million sales totals figured the vendor sold some 1.7 million tablets since inception last fall.
To cement the point of just how far Surface has to go to make a dent in the market, GeekWire noted that Apple (AAPL) moved 3 million iPads and iPad Minis in three days last November.
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