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Microsoft still losing money on Surface

Rogifan

Rogifan

macrumors Penryn
Original poster
Nov 14, 2011
25,330
33,800
http://www.computerworld.com/s/article/9247944/Losses_mount_for_Microsoft_s_Surface_tablet_line

I'm still trying to understand why Microsoft feels it needs to be in the hardware business (outside of Xbox). I don't think they had to build a Surface to show OEMs how to make nicely designed hardware. Companies like Lenovo, Samsung, Sony, and Asus have no problem doing so. There's no reason Microsoft couldn't have followed what Intel did with Ultrabooks and provided reference designs to OEM partners. IMO Microsoft's biggest strengths are software and cloud, not hardware.
 
I'm not surprised.

The RT version is hamstrung because people don't want a windows version that cannot run their apps. The Pro version is very expensive and its a heavy tablet, hard to sell it as such when there are so many other competitors (both on the Windows platform and iOS) that are thinner and lighter.
 
Revenue was down 45%, but expenses were up 15%. It sounds to me like they're still losing money on the original RT's and support costs. I highly doubt they're selling the Surface 2 for less than cost.

Another way to look at it:
Surface revenue increased by more than fifty percent to $494 million, but still loss-making, with cost of revenue of $539 million. This suggests a worsening of the business as compared to the previous quarter. In the previous three months, Microsoft lost $40 million on sales of $890 million. This three months they lost $45 million on lower sales.
Click to expand...
 
thejadedmonkey said:
Revenue was down 45%, but expenses were up 15%. It sounds to me like they're still losing money on the original RT's. I highly doubt they're selling the Surface 2 for less than cost.
Click to expand...

The RT makes no sense in the direction the company is heading with a unified OS. They need to dump it and just stick with wp8.1 and Win8.1. Throw the mobile OS on the cheap tablets and market the Surface pro as laptops, not tablets.
 
Lloydbm41 said:
The RT makes no sense in the direction the company is heading with a unified OS. They need to dump it and just stick with wp8.1 and Win8.1. Throw the mobile OS on the cheap tablets and market the Surface pro as laptops, not tablets.
Click to expand...

The RT, although maybe pathetic in sales numbers, was the beginning of unifying Microsoft's Desktop, TV, and Mobile platforms.

Windows Phone 8.1 is now running a version of Windows 8, and that's definitely connected to the RT version. I don't know if it needed to be made public, but it does need to exist.
 
not suprised i haven't seen one in a shop here or even seen one in the wild, nor would I be inclined to spend money on one
 
Because they are freakin morons. Completely axe the entire RT concept, just get rid of it completely. Produce a Surface with an Atom processor and full windows and market the HELL out of it, including the fact that they have the same battery life, thickness, weight, price, etc as an ipad BUT have full windows on them. Keep the surface Pro as a higher specced enthusiast/business/specialty product more in line with ultrabooks. Then really work on windows and fix the scaling issues on the desktop and figure out a solution for legacy apps to be more touch friendly.
 
spinedoc77 said:
Because they are freakin morons. Completely axe the entire RT concept, just get rid of it completely. Produce a Surface with an Atom processor and full windows and market the HELL out of it, including the fact that they have the same battery life, thickness, weight, price, etc as an ipad BUT have full windows on them. Keep the surface Pro as a higher specced enthusiast/business/specialty product more in line with ultrabooks. Then really work on windows and fix the scaling issues on the desktop and figure out a solution for legacy apps to be more touch friendly.
Click to expand...
No. Just no.

Full Windows on a tablet that is intended to compete with the iPad is so wrong that I'm surprised that you don't see that.

Do you not know all the systems maintenance tasks that have to manually be performed that are required to keep a Windows system running optimally?

Windows has a large number of subsystems that are really only useful in the enterprise environment. For example, why should a consumer level tablet be saddles with event logs, usage policy managers, and the like? Windows continues to have issues with application residue when an app has been uninstalled. System update installers take up space so that they can be rolled back.

Keep Windows x86 as it is and keep the Surface Pro for that audience... professionals, and focus on gutting those things out of Windows RT to make it more of an appliance OS. Windows Phone is NOT the answer.
 
sracer said:
No. Just no.

Full Windows on a tablet that is intended to compete with the iPad is so wrong that I'm surprised that you don't see that.

Do you not know all the systems maintenance tasks that have to manually be performed that are required to keep a Windows system running optimally?

Windows has a large number of subsystems that are really only useful in the enterprise environment. For example, why should a consumer level tablet be saddles with event logs, usage policy managers, and the like? Windows continues to have issues with application residue when an app has been uninstalled. System update installers take up space so that they can be rolled back.

Keep Windows x86 as it is and keep the Surface Pro for that audience... professionals, and focus on gutting those things out of Windows RT to make it more of an appliance OS. Windows Phone is NOT the answer.
Click to expand...
I have a Dell Venue Pro 8 running Windows 8.1. I have no problems and don't have to deal with event logs or anything of the sort. I do my weekly updates, same as my desktop PC, but its not a hassle. That said, full Windows is not the answer for tablets IMO. Windows Phone mobile OS is and now that if you write code for one it can work for the other, it is a no brained. RT simply isn't needed or it needs to be altered to fit wp OS. Right now, it is a waste of money (as evidenced in the article).
 
Lloydbm41 said:
I have a Dell Venue Pro 8 running Windows 8.1. I have no problems and don't have to deal with event logs or anything of the sort. I do my weekly updates, same as my desktop PC, but its not a hassle.
Click to expand...
Most people don't perform those housekeeping tasks that I'm referring to. They do their updates like you do and that's it.

It is common knowledge (or maybe not as common as I think) that Windows slows down over time. Many of my friends and family look to buy a new system when that happens. They conclude that the processor must be "worn out" or "slowing down" when it is really the accumulation of stuff over the weeks, months, and years. By spending about an hour and running some simple tools and performing some basic housekeeping tasks, I can bring the system back to like-new performance.

But most people don't view Windows device ownership like that.

Take a look at the size of your C:\Windows\SoftwareDistribution\Download\ folder. If you've owned your DVP8 for a few months you may discover that the directory is taking up 100'sMB (or in my case, GB's of space). There are other areas where disk usage creeps upward that are not taken care of by Windows' Disk Cleanup tool.

There are some manual tasks that I perform weekly, some monthly. This helps the system stay clean and lean. The only reasons I buy a new system are because of a hardware failure or simply the desire for something new.

I expect that on a high-horsepower desktop. I can accept it on a notebook. But I expect a tablet to be more like an appliance. That is not possible with the current state of the various versions of Windows.
 
sracer said:
Most people don't perform those housekeeping tasks that I'm referring to. They do their updates like you do and that's it.

It is common knowledge (or maybe not as common as I think) that Windows slows down over time. Many of my friends and family look to buy a new system when that happens. They conclude that the processor must be "worn out" or "slowing down" when it is really the accumulation of stuff over the weeks, months, and years. By spending about an hour and running some simple tools and performing some basic housekeeping tasks, I can bring the system back to like-new performance.

But most people don't view Windows device ownership like that.

Take a look at the size of your C:\Windows\SoftwareDistribution\Download\ folder. If you've owned your DVP8 for a few months you may discover that the directory is taking up 100'sMB (or in my case, GB's of space). There are other areas where disk usage creeps upward that are not taken care of by Windows' Disk Cleanup tool.

There are some manual tasks that I perform weekly, some monthly. This helps the system stay clean and lean. The only reasons I buy a new system are because of a hardware failure or simply the desire for something new.

I expect that on a high-horsepower desktop. I can accept it on a notebook. But I expect a tablet to be more like an appliance. That is not possible with the current state of the various versions of Windows.
Click to expand...
Just checked that folder. I've had my Venue 8 Pro for a couple of months and that specific folder is sitting at 19.4mb. I don't seem to have the issues you do.

Edit: out of curiosity I just checked my Dell XPS8700 desktop that i have had for over 6 months and that same folder is sitting at 18.7mb. I have Pink Floyd songs on my drive that are bigger. Are you running 8.1?
 
Lloydbm41 said:
Just checked that folder. I've had my Venue 8 Pro for a couple of months and that specific folder is sitting at 19.4mb. I don't seem to have the issues you do.

Edit: out of curiosity I just checked my Dell XPS8700 desktop that i have had for over 6 months and that same folder is sitting at 18.7mb. I have Pink Floyd songs on my drive that are bigger. Are you running 8.1?
Click to expand...
LOL Murphy's Law at work. Yes, I'm running 8.1 on a few devices and they've all ended up with a large C:\...\Download folder. But I'm happy to hear that those things aren't an issue for you. It makes things much easier without the need to handhold a system.

I'm curious about tablets with full Win 8.1 on them. How do you like your DVP8? There is a sale going on this week for $199 and I'm having a hard time resisting. In particular, how handy do you find it working with legacy apps?
 
I have the Surface RT and I enjoy it. It is very lightweight like a tablet and the battery is decent, maybe about 8-10 hours...but it will die after a couple days (if not used).

While the app selection that run on the RT are abysmal, in the work environment the tablet is very useful for me. It can connect to all the printers on the network (including getting the drivers). There are apps for VNC, Windows Remote Desktop, and shell terminals. Between those I can remotely connect to any machine on the network. And if I need to open a office document of some kind I can do that on the RT.

It's not an iPad, but there are things the iPad or an Android tablet can't do as well that the RT excels at.

We have an iPad in the household and it gets the hell used out of it, but I had no interest in the iPad to use at work. The Surface has been very useful. That being said I got it for $180 WITH the keyboard. I would not pay $400 or whatever it is plus another $100 for the keyboard. That's getting into midrange small laptop (with touch screens) and it would be hard to justify getting the RT.

8" also seems too small for me for Windows. 10" is ok, but still limits you. That's why I Wasn't concerned with the screen resolution of the original Surface RT, because I don't need things smaller as it would strain my eyes.
 
sracer said:
No. Just no.

Full Windows on a tablet that is intended to compete with the iPad is so wrong that I'm surprised that you don't see that.

Do you not know all the systems maintenance tasks that have to manually be performed that are required to keep a Windows system running optimally?

Windows has a large number of subsystems that are really only useful in the enterprise environment. For example, why should a consumer level tablet be saddles with event logs, usage policy managers, and the like? Windows continues to have issues with application residue when an app has been uninstalled. System update installers take up space so that they can be rolled back.

Keep Windows x86 as it is and keep the Surface Pro for that audience... professionals, and focus on gutting those things out of Windows RT to make it more of an appliance OS. Windows Phone is NOT the answer.
Click to expand...

That's MS largest selling point by far, and without it there devices division is going to die a painful death. IT departments have been deploying windows machines for decades and decades, what's the big deal? Windows 8 is extremely efficient and streamlined, just look at the minimal hardware specs you can run it on.

Hindsight shows us that this strategy isn't working, both last year and this year. No RT must die, and die before it causes more confusion and consumer anxiety.

----------
sracer said:
Most people don't perform those housekeeping tasks that I'm referring to. They do their updates like you do and that's it.

It is common knowledge (or maybe not as common as I think) that Windows slows down over time. Many of my friends and family look to buy a new system when that happens. They conclude that the processor must be "worn out" or "slowing down" when it is really the accumulation of stuff over the weeks, months, and years. By spending about an hour and running some simple tools and performing some basic housekeeping tasks, I can bring the system back to like-new performance.

But most people don't view Windows device ownership like that.

Take a look at the size of your C:\Windows\SoftwareDistribution\Download\ folder. If you've owned your DVP8 for a few months you may discover that the directory is taking up 100'sMB (or in my case, GB's of space). There are other areas where disk usage creeps upward that are not taken care of by Windows' Disk Cleanup tool.

There are some manual tasks that I perform weekly, some monthly. This helps the system stay clean and lean. The only reasons I buy a new system are because of a hardware failure or simply the desire for something new.

I expect that on a high-horsepower desktop. I can accept it on a notebook. But I expect a tablet to be more like an appliance. That is not possible with the current state of the various versions of Windows.
Click to expand...

That's simply minutiae, nothing more. If there is any slowdown it's not perceptible, that's my opinion running windows machines for years and years. Maybe it was true in the past, but since at least Win7 I've had systems running on the same installation literally for YEARS with no slowdown at all, and I work them very hard. I've run my Lenovo Thinkpad Tablet 2 on the same installation for almost a year and a half and it still performs perfectly, and that was with Clovertrail which I think is kind of crappy.
 
Microsoft needs to stop half assing and make an actual tablet. And if it can't run exe files, take the word Windows out of the equation.

Take a form factor like the LG 8.3, add Windows Phone 8.1, make it thin, and sell it. Not that hard.
 
Technarchy said:
Microsoft needs to stop half assing and make an actual tablet. And if it can't run exe files, take the word Windows out of the equation.

Take a form factor like the LG 8.3, add Windows Phone 8.1, make it thin, and sell it. Not that hard.
Click to expand...

Yes it is, if it doesn't run .exe files people will moan, if it doesn't have a decent CPU people will moan. IMO the Surface is the best compromise they could have come up with.
 
sracer said:
LOL Murphy's Law at work. Yes, I'm running 8.1 on a few devices and they've all ended up with a large C:\...\Download folder. But I'm happy to hear that those things aren't an issue for you. It makes things much easier without the need to handhold a system.

I'm curious about tablets with full Win 8.1 on them. How do you like your DVP8? There is a sale going on this week for $199 and I'm having a hard time resisting. In particular, how handy do you find it working with legacy apps?
Click to expand...

There is no difference between a PC and a tablet running full Windows 8.1, in terms of file use, printers, programs, etc. Obviously, the hardware limitations of a tablet means there are things it can't do. It's like having a netbook, but not as slow or as crappy an experience. :D
 
Technarchy said:
Microsoft needs to stop half assing and make an actual tablet. And if it can't run exe files, take the word Windows out of the equation.

Take a form factor like the LG 8.3, add Windows Phone 8.1, make it thin, and sell it. Not that hard.
Click to expand...

Why does Microsoft need to make tablets? Microsoft is a software company. Diverging into hardware (besides Xbox and stuff like mice and keyboards) make no sense to me.
 
Rogifan said:
Why does Microsoft need to make tablets? Microsoft is a software company. Diverging into hardware (besides Xbox and stuff like mice and keyboards) make no sense to me.
Click to expand...

They don't need to make Tablets, but they do need to make a Tablet OS. I think the decision to make the Surface was based on the idea that Microsoft blamed OEMs for the failure of Win8, and thought they could show them how it is done. What they soon realized is that Windows 8 failed Windows 8.

I think Windows 8 on an x86 tablet is great, but they're going to have to do something to get some developers.

Windows 8 on a desktop/laptop is ****. That'll be fixed with the return of the classic start menu though.. and I applaud MS for finally giving in to customer demand for it's return instead of continuing to plead ignorance.
 
Dustman said:
They don't need to make Tablets, but they do need to make a Tablet OS. I think the decision to make the Surface was based on the idea that Microsoft blamed OEMs for the failure of Win8, and thought they could show them how it is done. What they soon realized is that Windows 8 failed Windows 8.

I think Windows 8 on an x86 tablet is great, but they're going to have to do something to get some developers.

Windows 8 on a desktop/laptop is ****. That'll be fixed with the return of the classic start menu though.. and I applaud MS for finally giving in to customer demand for it's return instead of continuing to plead ignorance.
Click to expand...

It's funny that MS made the surface to show up the OEM's, but the OEM's make comparably crappy tablets when put next to the surface. Flimsy plastic, buggy software and drivers, poor support and they wonder why no one buys them. MS needs to just bite the bullet and sell their own hardware on a much larger scale. The PC market is dying quickly and with every day there is one less license that MS can sell.
 
spinedoc77 said:
It's funny that MS made the surface to show up the OEM's, but the OEM's make comparably crappy tablets when put next to the surface. Flimsy plastic, buggy software and drivers, poor support and they wonder why no one buys them. MS needs to just bite the bullet and sell their own hardware on a much larger scale. The PC market is dying quickly and with every day there is one less license that MS can sell.
Click to expand...

Which OEMs are you speaking about (besides probably Acer)?

----------
Dustman said:
They don't need to make Tablets, but they do need to make a Tablet OS. I think the decision to make the Surface was based on the idea that Microsoft blamed OEMs for the failure of Win8, and thought they could show them how it is done. What they soon realized is that Windows 8 failed Windows 8.

I think Windows 8 on an x86 tablet is great, but they're going to have to do something to get some developers.

Windows 8 on a desktop/laptop is ****. That'll be fixed with the return of the classic start menu though.. and I applaud MS for finally giving in to customer demand for it's return instead of continuing to plead ignorance.
Click to expand...

Seems there's a lot of scapegoating of the OEMs. They're in a commodity market with razor thin margins. And certainly didn't get much help from Microsoft in terms of a nice tablet friendly OS or a break on licensing fees.
 
I sold my iPad retina for a surface pro 2. Does what I need a tablet/ultra book to do for me, for personal and work, with a fantastic screen and enough battery life for me. Not cheap $$$, but I really like it. The surface rt for dirt cheap is what got me to give it a try and it was real nice for what it was.

If you want a tablet for games and apps, stay away from RT, the apps are getting better from what I hear, but I don't use them. RT has the full web browser so all you do is make shortcuts and there it is. Flash just works. The tegra 3 wasn't as snappy as the iPad retina though.

...as I type this on an iPad mini my wife won in a raffle.

I would like to see a full 8.1 clover trail with 4GB of ram and a 10" Full HD screen, I just wonder if the integrated graphics can drive a screen like that.
 
Rogifan said:
Which OEMs are you speaking about (besides probably Acer)?

----------



Seems there's a lot of scapegoating of the OEMs. They're in a commodity market with razor thin margins. And certainly didn't get much help from Microsoft in terms of a nice tablet friendly OS or a break on licensing fees.
Click to expand...

I've owned just about every clovertrail windows tablet made and they all suffered from some form of issue. Most of them had terrible build quality, some had decent build quality though like Lenovo. The driver support was crappy as well, there are no regular driver updates and bugs linger on for months and months. So far I've only owned 2 baytrail tablets, the T100 which is definitely subpar in terms of build, and the Dell Venue 11 Pro which is decent, but has huge issues with the synaptics digitizer and other little quirks like the video driver resetting and blacking the screen multiple times per day, the keyboard registering multiple entries with one finger press, etc etc.

Build quality is subjective. When I say crap I mean a plastic tablet that flexes, has screen lift, etc. Tablets like the Lenovo aren't "crap" at all, my TPT2 was pretty solid, but at the same time it was still plastic, had no kickstand, glass bonding, etc. Put ANY atom tablet against a surface and you will see exactly what I am talking about.

You guys know I'm the biggest MS fanboy on these forums, but these are issues which are holding back MS. Go to best buy and fondle an ipad, fondle the cool solid metal, look at the tiny bezels, fondle a surface and feel the nice black solid metal, amaze at the kickstand which is so stupidly obvious to include in a tablet, then go pick up an Asus T100 and tell me you won't notice the difference.
 
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