Microsoft’s Total Surface Revenue to Date: $853 Million

| Editorial

Microsoft announced on Tuesday that it's total haul to date on Surface, the company's iPad-killer, is a whopping $853 million. That's how much the company reported in its annual 10-K SEC filing, which includes all three quarters the Surface has been available.

For context, it took Apple just over 12 days to earn the same amount of money for sales of the iPad. That's based on the average selling price of $436 for iPads in the quarter. At that ASP, Apple needed just over 1.95 million iPads to bring in $853 million. 14.6 million total iPads sold during the quarter means Apple needed 12 days to hit that mark.

If it sounds like I'm gleeful, I am. If you're wandering why, it's because of the smack that Microsoft CEO Steve Ballmer talked about the iPad when he launched this furry turd. To wit:

I don’t think anybody has done a product that is the product that I see customers wanting. Not Apple; not Google; not Amazon. Nobody has a product that lets you work and play that can be your tablet and your PC. Not at any price point.

I've gone on and on about this, so I'll spare you the repetition: the short version is that Steve Ballmer was wrong. Seeing this thing flop is frankly gratifying.

Also, note that this figure is different from the $900 million Microsoft had to write down because it made more of these things than it could sell. That's right, Microsoft's Surface revenues-to-date are less than the Surface write down.

[Via GeekWire]

Comments

Lee Dronick

I have just returned from my evening walk. Up at Starbucks I saw a fellow using a Surface, that is the first that I have seen out in the wild.

haywire

Now subtract all the cost of Surface TV ads (and I saw a lot of them, even though I don’t watch TV every hour) - then how much did Microsoft NOT make?

vpndev

Revenue for Surface RT and Surface Pro: $853 m
Advertising for Win8 and Surface: $898m
Writedown: $900 m

Looks like minus $945m

geoduck

The Surface, especially RT is truly a “furry turd”. Microsoft is losing buckets of money on it. But don’t count them out just yet. Sure they killed the Kin and Zune due to performance that wasn’t nearly this bad. OTOH they kept with the X-Box and after dumping a pile of money down that rat hole for a number of years they ended up with a popular unit that sells a lot.

Microsoft often uses its customers to do final testing and development.

Lee Dronick

I don’t get it. They have the money to hire some talented people, and they probably have plenty of them, but something is out of joint. Are they too top down management without having a creative visionary at the top, too many people on the comittees that make design decisions? Take a gamble, assemble a team with a good leader, tell them create an iPad killer, then get out of their way.

geoduck

Lee:
I agree, I don’t understand Microsoft either. They have the resources and they have the talent. Why then do they keep coming up with things like Zune, Surface RT, The Office Ribbon, and Clippy. It’s like they are in some ‘80s parallel universe and believe that “bad” actually means good.

ibuck

geoduck: Why then do they keep coming up with things like Zune, Surface RT, The Office Ribbon, and Clippy.

What About Bob?

daemon

The Surface RT isn’t bad, it’s just priced wrong. They were trying to compete against Apple at the prices Apple sells the iPad, that doesn’t work since Microsoft isn’t a status brand.

mrmwebmax

+

daemon, price aside, I think the problem with Surface are numerous: Product confusion between Surface RT and Surface Pro, a desktop experience crippled by a tablet interface, a tablet experience crippled by a desktop interface, a much-hyped, much-touted feature (keyboard cover) sold extra at $100 or so, a lack of apps, a confusing at best marketing campaign, and late entry into a field already dominated by iOS and Android.

daemon

There is no desktop interface on the Surface RT.

daemon

http://www.youtube.com/watch?v=e4Cs3Pp7mYg

Tell me, what movie is this commercial promoting? V for Vendetta?

mrmwebmax

+

There is no desktop interface on the Surface RT.

My bad regarding Surface RT, but it certainly applies to Surface Pro.

Garion

daemon wrote: “The Surface RT isn’t bad, it’s just priced wrong. They were trying to compete against Apple at the prices Apple sells the iPad, that doesn’t work since Microsoft isn’t a status brand.”

Well, we’ll see about that theory, now that the Surface RT price has been dropped as low as $349.

daemon

“Well, we’ll see about that theory, now that the Surface RT price has been dropped as low as $349.”

That’s not the right price point for the Surface RT. $199 is the right price point for the 64GB version, 32GB should be done away with, but could be interesting at $75.

Bryan Chaffin

Daemon, in that it costs more to manufacture than that, how would that work? I agree that Microsoft could probably move many more Surface RT units at $199, it would be losing more than $100 per.

I also suspect that even then, they would go unused, but I have no data to back that up.

What are your thoughts?

daemon

Bryan,

My thoughts are that you can walk into any Best Buy in the US and buy a brand new laptop starting at $270.  The Surface RT needs to fit economically into the spot right below that laptop. It either needs to be so compelling I’m willing to pay more for it than I would for that $270 laptop (making them direct competitors) or it needs to cost less than that $270 laptop allowing it become an accessory to that laptop.

Here’s a cost break down for the Surface RT:
http://www.isuppli.com/Teardowns/News/Pages/Microsoft-Surface-RT-More-Profitable-than-iPad-Teardown-Analysis-Reveals.aspx

$271 for parts alone, plus $13 for assembly.

Compare that to the Nexus 7:
http://www.isuppli.com/Teardowns/News/Pages/Low-End-Google-Nexus-7-Carries-$157-BOM-Teardown-Reveals.aspx

$159.25 for the 16GB version, the version that everyone was buying.

Microsoft targeted the wrong price segment with the Surface RT.

Bryan Chaffin

Ah, I see your point now. You’re not arguing that Microsoft should sell *this* Surface RT at a loss, but rather that it goofed up by not designing it for a lower price point in the first place.

I agree with you, but note that a cheap 7-inch device isn’t part of Microsoft’s “vision” for a hybrid device. Google is allowing the tablet to be a tablet, but Microsoft is hung up on the notion that people want toaster-fridges.

Even Amazon got that right.

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