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Monday, August 5, 2013

Microsoft has announced its earnings for Q2 2013, and the results are a mixed bag. One obvious negative, however, is the $900 million writedown officially blamed on “inventory adjustments” related to the Surface RT tablet line.
The $900 million figure comes as a result of unsold Surface RT tablets, with Microsoft rumored to have built between 3 million and 5 million units, and consequently rumored to have sold only around 1 million units. It was only last weekend that Microsoft announced a series of price cuts which saw the 32GB Surface RT tablet drop from $499 to $349 and the 64GB Surface RT drop from $599 to $499.
In real terms this hit caused the company’s earnings for the quarter to drop from 66 cents per share to 59 cents per share. Both figures were lower than the 75 cents per share Wall Street analysts were predicting.
Microsoft Surface with RT, to give it its official billing, was meant to offer an affordable alternative for those who wanted Windows on a tablet but didn’t need the full capabilities Windows 8 has to offer. Unfortunately Windows RT isn’t great, and the Surface RT tablets don’t (or at least didn’t before the recent price cuts) represent good value for money.
Have you purchased a Surface RT tablet yet? I suspect not, as very few people have done. I’m not even sure mainstream consumers know what a Surface RT tablet is, quite frankly. Many may not even be aware you can get Windows 8 in any form on a tablet, as their knowledge of the market begins and ends with the Apple iPad.
This is a huge problem that Microsoft needs to remedy if it hopes to keep the Surface brand going. Which looks likely given the strong rumors that a new line of Surface tablets are to be launched in the very near future. If Microsoft doesn’t breathe life into the Surface brand then they could have another Zune on their hands.
Posted in Microsoft Surface, News, Opinion, Windows 8 | No Comments » Read more from Dave Parrack
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