Microsoft reveals $900M write-down on Surface RT tablet

http://www.cbc.ca/news/business/story/2013/07/18/business-microsoft.html

78 98 13 years ago

wingspan• 13 years ago

Is it just me, or was that article constantly confusing million and billion?

jpreiland• 13 years ago

Yeah they have 4.97M in large bold letters and then 4.97 billion shortly after. Also in the last paragraph they do it again with the $19x and $20x figures.

jussij• 13 years ago

Yep, as you point out the figures are all over the place.

The last error is a real clanger:

Revenue grew 10 per cent to $19.90 billion, also below the $20.72 million expected.

Based on those figures revenue was in fact up by about 20,000 per cent.

mikestew2• 13 years ago

The Surface RT experience was summed up best for me by the wife of a Microsoft employee and friend of mine: "it makes me feel stupid". I guess she'll be sticking with her iPad.

Me, I didn't think it was that bad. Though I, too, wondered "why wouldn't I just buy and iPad?" Seems that's a question everyone else asked themselves.

mjn• 13 years ago

Not sure it'd be sufficient, but the entry-level model is considerably cheaper. $350 for a Surface, $500 for an iPad.

cclogg• 13 years ago

But then you have the iPad Mini too...

rgbrenner• 13 years ago

Isn't the $350 figure after the recent price cut?

anigbrowl3• 13 years ago

They should have launched Surface as it sown OS instead of trying to be Windows. I actually want an Intel Windows tablet because there's a bunch of audio software I'd use that will never be available on the iPad and it would be great to have a touch interface for my-obscure-applications. but Windows RT was the worst of both worlds - since it doesn't do anything in particular, I might as well just buy an iPad (if I want groovy, albeit somewhat limited, apps) or a Kindle Fire (if I just want to surf the web and consume content).

honestcoyote• 13 years ago

That might help now, though I suspect it won't help much, but at release, and for a long time afterwards, the Surface was $599.

shinratdr3• 13 years ago

As of a couple days ago, and you're choosing to ignore the true entry level device in the iPad line, the iPad mini which can't match on specs but does beat it on price, portability and form factor.

I can't think of a single person I've talked to about purchasing a tablet that considers specs except for myself so that's hardly the motivator some would make it out to be.

zmmmmm• 13 years ago

"why wouldn't I just buy and iPad?"

There's exactly one answer to that question: office. 9 hours of office in a device the size of a pad of paper.

But the problem is, the exact people who would buy RT for that reason cannot use it or would not want it for a range of other factors (for example, it cannot join a domain).

And now with the new Intel chips there is no reason at all, because you can get 9 hours of office from a full Win8 tablet.

mtgx• 13 years ago

But it wasn't optimized for tablets. It's the same experience you would've gotten with Office ten years ago on "tablet PC's". And why would you want real Office on a tablet anyway? Fost most of the stuff you'd be doing on a tablet, you're probably better off with a free/much cheaper Office alternative that's also touch-optimized.

MatthewPhillips2• 13 years ago

No one buys tablets for office productivity. The only audience where that is an issue is salespeople, but that's a sliver of the tablet buying market.

1010011010• 13 years ago

9 hours of office

Except that I hate using Office, and my job doesn't require it.

workbench7• 13 years ago

Office was the only reason to buy one, and MS screwed that up completely by not making a tablet version of Office. Instead the Surface team bent over for the Office team and included the desktop mode as a crutch to purely run Office.

MatthewPhillips2• 13 years ago

I own a Surface RT and don't particular like it. I could list all of the reasons (it's slow, most of the software is bad, the corners are sharp, etc) but I don't think they have anything to with why it didn't sell well.

Probably price is the only thing that matters here. Price and exposure. You can't compete with name brand -- no matter the merit -- if you can't beat them in price.

gcb03• 13 years ago

wow. and the ipad doesn't?

i'm shocked. really. i'm not trolling, belive it or not, but i fell like in a straight jacket using any iOS device.

Zarel• 13 years ago

I think what mikestew means is that the Surface RT makes her feel stupid because she can't figure out how to use it.

mikestew2• 13 years ago

Correct, the iPad apparently does not make her feel stupid. Hence my following comment about how she'll probably be keeping her iPad. It would seem my wording made the answer obvious, but I'm open to suggestions on how it could have been more clear.

tootie• 13 years ago

"why wouldn't I just buy and iPad?"

Because they are expensive and completely locked down?

CamperBob24• 13 years ago

As opposed to a Surface?!

rbanffy2• 13 years ago

Unlike the Surface RT?

kabdib• 13 years ago

My wife got one, and the first week she had it she was surfing forums and mucking around with the task monitor and RegEdit (!) in order to deal with some runaway process caused by an errant app. Maybe a game. We never found out. It's supposed to be designed so it can't go haywire that way, but it does. Fail.

Never heard of such a problem on an iPad.

The Windows division might think it knows how to deliver a tablet-friendly OS, but really, it doesn't. It's clownville; they don't understand how to do box-level security (as on consoles) and they don't know how to do stability at the level required by a "mom" consumer product. (The Xbox group took Win8 and had to do extensive modifications in order to make it play well -- the original mandate from the execs were "run Win8 without any changes" and /that/ would have been a fucking disaster).

If Microsoft is serious about putting a real "tabletized" version of Win8 in consumer hands, they need to do a bunch of housecleaning and internal education. It's a mess.

ghshephard3• 13 years ago

"Never heard of such a problem on an iPad."

My iPad has now reached the point where, if I don't carefully set it into Airplane mode, Battery drains in 24 hours, even when asleep. I don't know if it's my mail client, or a background task being woke up by a geofence, or one of the GPS/WiFi radios - but I can't reliably leave it sitting around for several days anymore.

So, now I get into the game of "Disable Location Services for All applications, Disable Notification Services for All Applications, Turn off all Radios - NOW, turn on a small handful of services, and observe for a week - if everything looks good, turn on some more - keep doing so until the battery starts draining in 24 hours, and then try and identify the errant applications"

My #1 gripe about the iPad continues to be battery draining because of background tasks. If I could only "Force" the iPad into NO MULTITASKING, Single Damn Application at a time and NOTHING else mode, Don't Check Email, Don't Check GPS, Don't play music, Don't Download - I'd be happy. The only reliable way I've found of guranteeing this is to power it down - but it takes a long time (90+ seconds) to power it up each time I want to use it, which kind of detracts from the device...

So, no - iPad is not perfect. I would say 50% of my time this trip, when I went to use it, battery was completely dead so I ended up with my MacBook Air sitting on my chest to do reading.

mistermann2• 13 years ago

The iPad interface makes me feel like the general public is stupid. It is so terribly inefficient and dumbed down in so many ways that I have a huge incentive to use anything else.

workbench7• 13 years ago

The general public ARE stupid

sleepybrett• 13 years ago

The 'iPad Killer' folks.

anigbrowl3• 13 years ago

This is sort of beside the point, but I've realized who Steve Ballmer reminds me of; it's Gru in Despicable Me.

I feel like this might be part of Microsoft's problem; I definitely do not want to buy anything from that angry guy in the photo, even though I consider myself something of an MS fanboy.

gtani• 13 years ago

and... the 8" win8 tablet is here. The first reviews are... consistent!

http://www.seattlepi.com/technology/businessinsider/article/...

reiichiroh2• 13 years ago

Is it bashing if its deserved?

shinratdr3• 13 years ago

Acer just doesn't get tablets. I can't think of a single Acer tab worth owning, the entire Iconia series is a joke, cranked out to be $20 cheaper than the next guy at the expense of everything that matters. Screen quality, network connectivity, build quality, all complete crap.

Letting them launch the first diminutive Surface tablet and allowing that thing past Microsoft QA is a huge mistake on the part of Microsoft. I can't believe they allow their hardware partners to screw them that badly when they have facilities in place to stop it

They can't do much about some terrible laptop that shouldn't exist, but the licensing for RT is far stricter. How about using that ability and keep crap like this off the market.

fdm• 13 years ago

the licensing for RT is far stricter

The OP and the article are talking about the Acer Iconia W3 that runs full Windows 8, not Windows RT.

elorant• 13 years ago

Well the good news are that now we could get a SurfaceRT really cheap considering that sooner or later all the retailers would try to dump their stock.

reiichiroh2• 13 years ago

Office 2013 (desktop mode in general) is most certainly not optimized for touch. Its touch targets in menus, dialog choices, radio buttons and ribbon items are teeny tiny on my Surface Pro.

hbharadwaj3• 13 years ago

Opinion: RT was an interesting strategy and most people in Steve Ballmer's shoes would have taken the same bet. It came at a time when Microsoft didn't have a tablet to compete with iPad. So, what did they do? They converted their existing Start interface to occupy the entire desktop into Metro Mode. If you think about it, the desktop was always a huge waste of space. After they converted, Microsoft had couple of major issues - if they allowed for tablets running legacy apps or forced x86 on tablets, people would ignore the new interface and continue building legacy apps. The new metro was going to be used by their phones and game consoles in a one screen, 3 devices policy and in case they didn't have metro apps, their phones and consoles would suffer. Windows was always the driver - it had to be. So, they decoupled desktop from their new interface and put it in a new set of devices supporting low powered ARMs.

And as such, current Office is never really meant for Touch. So, I am guessing they were forced to bundle a pseudo-desktop along with RT to support Office which is also a cash cow. Would they have loved to remove Desktop completely? I would bet so.

Maybe Microsoft foresaw that x86 prices would fall, power would increase and battery life would increase etc., but they had to continue down this road and take a hit because they needed metro apps. My bet is that they were willing to take the hit. I don't think anyone in Microsoft had the impression that RT would come save the day. It is a necessity because of their new direction. If RT designs in app interest being generated, I would say that it did it's job to some extent. Of course, I don't know how this will play out but according to me, these are some very daring decisions being played out at MSFT and I would say better than Google.

maskedinvader• 13 years ago

I agree with everything you say ! I am no fanboi, I use whatever works for me best, I own an iPod touch (for the music), the galaxy s4 (running touchwhiz flavor of jelly bean v4.2.2) , own the xbox360 and a win 8 desktop PC, New Lumia phones and win 8 pro tablets have impressed me.I think the new xbox and how surface pro and rt have seen Microsoft going for those 3 segments and almost inevitably converging to a single os that runs them all !

I wouldn't be surprised if windows 9 or 10 perhaps would have you writing code once and deploy them to your new xbox, new PC, new surface, new Lumia and new smartwatch and who knows maybe even some sort of kinectified glass you wear all the time, Imagine the big win for hitting so many screen sizes with one codebase.

Steko4• 13 years ago

"most people in Steve Ballmer's shoes would have taken the same bet. "

That's why you look for a CEO that isn't most people. The CEO isn't a service award you hand out to the general who won the most battles 30 years ago.

hbharadwaj3• 13 years ago

Well, I used it in a casual way for making it seem like an obvious decision - the perception having been part of my opinion.

Please allow me to correct myself - Most people wouldn't have taken the bet nor have the insight to do so. Steve Ballmer or maybe Steve Sinofsky or someone did. And they are not most people.

It's a billion dollar strategy. Not easy to make.

CamperBob24• 13 years ago

So you make decision after decision based on what the company needs, instead of what the user needs, and this is where you end up.

I agree with the other comment: Ballmer isn't paid nine gazillion bucks to do what "everybody else" would do in his place.

hbharadwaj3• 13 years ago

If all the decisions were based on users, the company will never be able to define the future. I think we clearly see that in product failures/criticisms - even the new Xbox backlash for MSFT. Consumers are fickle. They never like drastic changes. And consumers always choose near term interests than long term benefits.

I don't understand why HN Users need to single out MSFT/Steve Ballmer as making mistakes all the time. They have made mistakes but my point is - RT wasn't one of them. It's cool to analyze strategies without associated fanboyisms/ individual hatred.

jser• 13 years ago

Daring or repeating history? Windows NT was ported to a host of platforms -- DEC Alpha, MIPS, PowerPC, and Itanium. None have gained substantial traction.

Had they been daring, the desktop would have been removed. Instead, Metro feels like a reincarnation of Apple's At Ease.

RT could have had a chance, but beyond the crayon colors, I believe the root cause was the bland, simple Metro interface. The textures, shadows and other elements of iOS 1 - 6 are engaging in a way that the flat interface is not. Side-by-side I'm always more compelled to pick up my iOS 6 phone over the iOS 7 phone. Or the flat-before-it-was-cool Blackberry.

When I visit a museum, people spend less time at simple modern art pieces. When I turn on pop radio, heavy layered beats dominate.

I might have bought an RT tablet if didn't feel like the Ikea of tablets.

cpleppert• 13 years ago

Their is no 'RT' strategy to speak of. Microsoft decided to use a desktop operating system in tablet devices instead of using a mobile os like everyone else.

So instead of having to make a single adjustment for applications(larger screen) microsoft built an entirely new interface and APIs to support that interface. New applications built for that interface are designed to replace traditional desktop applications and work well a variety of screensizes and both with and without touch input. The motivation behind this decision was to leverage windows' market penetration to build momentum for their mobile strategy. This isn't so much a strategy as an overwhelming desire to always leverage windows when entering a new market segment. It is a crutch that makes true innovation impossible.

The problem is that this 'strategy' is impossible. There is no such thing as a magical toolkit that can do what Microsoft wants. Instead, you have massive consumer confusion and applications that don't work well on non-touchscreen devices. Now Microsoft has to support new 'Modern/Metro' applications going forward on Windows for the foreseeable future. It takes resources away from the traditional desktop experience.

Imagine if Microsoft had simply taken Windows Phone and adapted it to a larger screen size. It would have used the same API and provided a considerably better experience for consumers(without any confusion) at virtually new development cost or adoption of a new toolkit/application experience for the desktop. The only thing microsoft would have lost was the ability to run mobile applications on the desktop. A dubious benefit to say the least.

RT was an interesting strategy and most people in Steve Ballmer's shoes would have taken the same bet. I strongly disagree as I know many other people did as well.

tmzt• 13 years ago

Microsoft and everybody else has been waiting for years for Intel to reduce the power consumption of x86, so long that ARM has caught up from an CPU appropriate for mobile devices to an serious competitor to the dominant platform.

Intel has done everything they can to "prove" that their chips are ready, but they've done the same thing before. They partnered with Nokia and rebuilt their system for internet tablets into a general purpose system for mobile devices (including netbooks), then automotive systems. They released a chip for smart TVs and set-top boxes, then abandoned the entire line, leaving devices without firmware updates in certain devices (like Boxee). They've gone to great lengths to target smartphones and smaller tablets where the larger footprint would be a serious downside.

I will admit that intel has finally delivered a chip that is competitive with ARM on smartphones and smaller tablets.

I will agree with another commenter (either here or on the other story) that it is too early for the RT to be introduced as a product category. But I also believe that Microsoft has to succeed in getting a Windows product on ARM based on the NT kernel if they want to maintain their long-term dominance in personal computing, particularly for businesses.

They may have the wrong idea with trying to build a media consumption tablet built around applications in the same device as they have with Windows RT. I would suggest they take the opportunity with the 8.1 upgrade to support arbitrary compiled Windows applications, starting with Google Chrome and Mozilla Firefox. (Both would likely be ported if that was possible.) That they embrace developers using Visual Studio 2012 to build applications on the device, not just for the device. I would suggest that they use Microsoft Installer (MSI) to hide the fact that the applications are compiled for ARM, call them "Universal Windows Applications" if they must.

I considered the Surface RT before getting my Samsung Chromebook (ARM) and went for the latter of both price and lack of support for Windows (Win32) applications on the RT.

Mikeb85• 13 years ago

The surface was always destined to fail. People tolerate Microsoft because it's been the de-facto standard for so long, Apple hardware and Google services are what people enjoy.

For higher end tablets the iPad is the winner, for the lower end the Nexus 7. For open-source junkies the only real choice is Google, regular consumers can use either (based on the popularity of Android).

Where does MS fit in? From their lousy image, to their WTF? commercials, their archaic business model and poor services, no one wants an MS product.

purplelobster3• 13 years ago

To each his own, but I just bought a Surface Pro and love it. It replaces a laptop and tablet and more, it's my main (and only) device from now on. Windows 8 makes total sense for a tablet, and is not in the way when I'm coding (hooked into a real keyboard/mouse/display). The killer feature for me though is the Wacom pen which is absolutely fabulous. I have like 10 notebooks spread out at work and at home with my notes, thoughts, diagrams, illustrations etc. Writing notes and todos in a text-editor feels like a straight jacket, but with the Surface it's even better than paper. I have an infinite drawing surface, I can zoom in and out, move stuff around, mix drawing with typing, draw diagram boxes, circles, insert images, copy and paste, undo, erase, share digitally etc. Now I can keep my notes all in one place, backed up and searchable. Writing with it even feels better than paper for me (not sure if being left-handed has anything to do with it), it's very responsive, has a sharp tip (unlike any pen you'll find on capacitive screens like the iPad). It just all fits together very nicely. This is the new PC, this is the productivity device I've always wanted. Being the Surface 1.0, it's not perfect, so I'll be transitioning to the Surface 2.0 when it comes out so that I'll get 9-10 hours of battery life instead of 5-7 now.

Would also like to clarify that the Surface RT is as useless as the iPad, if not more because of the lack of apps. Having Office on it might make it worth it for some people though.

pelemele• 13 years ago

1. Nobody cares about handwriting all day long, quite a niche use (the same as for Tablet PC 8 years ago). 2. Nobody cares about MS Office anymore. There are alternatives (and free) for regular folks. 3. There is no new PC coming and MS learnt that today. 4. I have a feeling that this post is a well prepared marketing pitch...

Peace!

ximeng• 13 years ago

What software do you use for note-taking? I also have a surface pro and am also very happy with it despite a few minor problems. For me there is occasional poor response to multitouch scrolling on the touchpad, and sometimes the cursor stops responding to the touchpad until I press escape. Also no middle click on the touchpad is annoying, no right ctrl bugs me, and not having separate pgup, home etc. keys is not convenient. Nowhere to put the pen when charging either. I hope at least some of these problems will be resolved by driver updates, e.g. nothing to stop Fn+F acting as Ctrl+F.

Despite the above, the specs, design and portability of the surface pro were better than anything I found when buying it . I get a tablet while still being able to work, which for me requires access to MS software including office. It's comparable with ultrabooks but with the stylus support and detachable keyboard it's just about in a league of its own, though some products are close nothing seemed as well designed, featureful or portable at the price.

malkarouri• 13 years ago

I wonder if such things should be evaluated in terms of the knowledge and experience they gained the company. I would say the Surface RT experience has reflected a lot on their experience and strategy developing Windows 8 and Phone. If (say) the experience is reflected in the level of success of Windows Phone 8, then may be overall it is a net success for Microsoft.

I think every company (like Microsoft, Apple, Google did) need to maintain software and hardware divisions, if only to get the feeling what are the software current needs in an evolving hardware profile.

gcb03• 13 years ago

isn't the RT already the cheaper option?

they should lower the $1k pro so then ipad and air would have decent competition.

teamonkey• 13 years ago

The RT was released very slightly cheaper than the iPad but the hardware specs were miles behind the iPad.

It's not a bad device, there's just no real reason to own one over the competition at that price.

If they'd thrown in the keyboard case AND Office for the price they launched at, I think they'd have got a lot of traction. Maybe also fixing VPN so it's useful for business users.

nickfromseattle• 13 years ago

They are basically giving these away at Microsoft conferences. The last three I attended had them for sale at:

RT w/ keyboard for $110 (retailed at $699)

Pro for $399 (retails at $999).

I tried picking up a couple to resell for profit but there is zero demand. Nobody responded to my ads on Craigslist, Facebook or Twitter. Ended up selling them for cost.

hollerith• 13 years ago

I would've bought one of your Surface Pros for $499 or even $599.

Everlag• 13 years ago

If they could sell them at those prices, because of course resellers would be quite unhappy, I could imagine just about anyone making an effort to integrate them into their workflow.

The surface would no longer be something to work into a routine because it was a big expensive toy but rather a system that has a genuine use case.

Hell, if they could get the worst rt into the ~300$-~350$ range Microsoft could compare an rt to a nexus 7 and that would be their best bet to get the most sales.

fumar2• 13 years ago

I would more than gladly purchase a pro.

locusm• 13 years ago

Windows 8 Metro Apps on the desktop warned me off ever buying a tablet. The apps feel fisher/price, noddy apps and "good for demos" - not for getting stuff done. If you don't believe me just start with a fundamental app like email. Ill wait for you here with a box of tissues...

iyulaev• 13 years ago

I paid about $600 for a Samsung 500T and I think it's a great device, albeit for a small market. I bought it because it was effectively a 1kg netbook with a 10 hour battery and a stylus. It's not as good of a tablet as the iPad but it's a real computer, which makes it great for running office, gcc, CAD programs, and all that "on the go." When I need to do some reading I pick up my iPad, but as my super-portable meeting/lunch/whatever computer the 500T is a big winner. Given that an x86 processor (Atom) can get 10 hours in a tablet I'm not sure what the point of RT was though.

fludlight• 13 years ago

Commercials with dancing people might sell clothes and booze, but they don't work for technology. I could barely tell what the product was until the end. And I still don't know why a Surface is better than an iPad.

Microsoft reveals $900M write-down on Surface RT tablet

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