Microsoft losing money on Surface tablets

SEATTLE Tue Jul 30, 2013 7:04pm EDT

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012. REUTERS/Rick Wilking

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012.

Credit: Reuters/Rick Wilking

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SEATTLE (Reuters) - Microsoft Corp's Surface tablets have yet to make any profit as sputtering sales have been eclipsed by advertising costs and an accounting charge, according to the software company's annual report.

The two tablet models, introduced in October and February to challenge Apple Inc's popular iPad, have so far brought in revenue of $853 million, Microsoft revealed for the first time in its annual report filed with regulators on Tuesday.

That is less than the $900 million charge Microsoft announced earlier this month to write down the value of unsold Surface RT - the first model - still on its hands.

On top of that, Microsoft said its sales and marketing expenses increased $1.4 billion, or 10 percent, because of the huge advertising campaigns for Windows 8 and Surface. It also identified Surface as one of the reasons its overall production costs rose.

The Surface is Microsoft's first foray into making its own computers after years of focusing on software, but its first attempts have not won over consumers. By comparison, Apple sold almost $24 billion worth of iPads over the last three quarters.

(Reporting by Bill Rigby; Editing by Bernard Orr)

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Comments (6)
lewtwo wrote:
RT was a bust from the word go.

Jul 30, 2013 7:56pm EDT  --  Report as abuse
jnffarrell wrote:
Old-boy PR genius at Microsoft thinks negative campaigns work. Spend a billion in negative PR and watch competitors sales tank by $B… it worked like a charm, but.. also suppressed MS sales by $B. Apple probably lost $1B in revenue. Nobody noticed. Microsoft had to write off the $B worth of sales its own PR killed. Way to shoot yourself in both feet with instant negative response. Time for Quick Dray McGraw or a cartoonish Avatar to run MS PR.

Somehow the “you won’t be ready for the internet until we, MS, tell you you’re ready” isn’t working.

Jul 30, 2013 11:40pm EDT  --  Report as abuse
tjordanchat wrote:
Microsoft did this to themselves. A race to the top. Bigger and bigger PCs would mean more margin for OEMs thus more money for Microsoft. Microsoft was able to control the size of the machine by making their operating system require it. So they did and now look at the fine mess that they got themselves into. It’s a crying shame Microsoft because God gave us visionaries like Steve Jobs and Eric Schmidt.

Jul 30, 2013 12:25am EDT  --  Report as abuse
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