SEC filing reveals Microsoft loses money on each Microsoft Surface tablet sold

SEC filing reveals Microsoft loses money on each Microsoft Surface tablet sold
Last week, Microsoft reported its Q1 earnings, and filed the appropriate papers with the SEC. A look at the documents revealed that the Microsoft Surface has yet to sell in the volume necessary for the tablet to produce profits for the Redmond based software giant. In other words, each Surface sale is dripping more red ink on Microsoft's balance sheet.

For the three months ended March 31st, Microsoft lost $45 million on $494 million in Surface sales. For the nine month period ending in March, the red ink totaled $300 million on revenue of $1.8 billion. The cost of generating the Surface sales for each period was $539 million and $2.1 billion respectively.

Microsoft's game plan is a lot different than Amazon's plan. The latter loses money on each Kindle Fire it rings up by design, and makes it back and more by selling apps, content and cloud based storage. Speculation has the crew in Redmond working on a Microsoft Surface mini, with the additional sales generated by the product, possibly enough to put the Surface in the black after a year and a half of such sales.

source: MicrosoftNews via WMPoweruser

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Surface 2
  • Display 10.6" 1920 x 1080 pixels
  • Camera 5 MP / 3.5 MP front
  • Processor NVIDIA Tegra 4, Quad-core, 1700 MHz
  • Storage 32 GB

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19 Comments

1. tigermcm

Posts: 861; Member since: Sep 02, 2009

waiting for a fire sale......

4. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

They had one with surface 1 selling at 30% of the original selling price of 499. But even at less than 200 I still don't think I will benefit much from the purchase. RT app collection was about 200++ without support of major video codecs.

5. nlbates66

Posts: 328; Member since: Aug 15, 2012

VLC player beta is in the windows store now btw :)

6. tigermcm

Posts: 861; Member since: Sep 02, 2009

30% to me is absolutely not a fire sale

7. Mrmark

Posts: 396; Member since: Jan 26, 2013

Exactly ...$99 for Surface 2 is a fire sell 150 for 64gb

12. sgodsell

Posts: 7365; Member since: Mar 16, 2013

Microsoft should just cut their losses and kill off the surface and surface 2 that are based on the Arm processors.

14. dorian827

Posts: 161; Member since: Jul 28, 2012

I fully agree to expensive either way

15. Crispin_Gatieza

Posts: 3137; Member since: Jan 23, 2014

Why worry about apps when you have a full-featured desktop browser? There are many apps on Android, WP, BB, etc. that are nothing more than shortcuts to a mobile browser URL. At least on RT 8.1 you have IE11 and all its features.

17. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Web services and apps are very different in nature. I will apps to book cab, find out when the next available train. Book a show while i am on a train. Web services is for my internet banking, general surfing at home. Two mature mobile OS, iOS and Android do both readily. Why would anyone bother with a compromise with Windows Phone and RT. A full fledged windows is a different story hopefully Samsung will come out with a phone enabled mini tablet running full fledged windows.

18. tigermcm

Posts: 861; Member since: Sep 02, 2009

they def will not only because they are focused on their pro tabs

2. hung2900

Posts: 966; Member since: Mar 02, 2012

It's clear to see that the purpose of Surface is to promote the Window-touch platform (or so-called Modern UI) with more and more apps comming. It's a loss currently, but this strategy ensures the future of Windows, because with the current dominant of the OS Modern UI apps will be more and more popular and adapted by customers.

3. vincelongman

Posts: 5692; Member since: Feb 10, 2013

I think MS made a loss on the HP hybrid I got from the MS Store It has i5, 4GB RAM, 256GB SSD, 10 hours battery (only negatives is that its fan-cooled [because i5 CPU] and is only 768p) I got it for $450, down from $900 regular price, not sure why it was 50%, it was also just released

8. express77 unregistered

If surface tablets were using intel x86 mobile processors, would they have been able to run .exe programs. I have heard somewhere ARM don't support exe files but can intel x86 mobile processors?

10. zoransoce

Posts: 4; Member since: Feb 01, 2013

thay can run .exe files. and you can hook up your controller and play skyrim!!!:D

13. sgodsell

Posts: 7365; Member since: Mar 16, 2013

Windows RT cannot run any legacy apps or programs written for x86.

9. jroc74

Posts: 6023; Member since: Dec 30, 2010

Lots of companies make hardware at a loss. Thats why ecosystems is important....I think the PS4 is one of the few consoles that Sony is seeing less loss from than previous years. Nintendo is the king...when their consoles are selling well.

11. dorian827

Posts: 161; Member since: Jul 28, 2012

GOOD, to pricey for the most lousy specs and features.

16. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

Microsoft is new to the Game of designing and finding the cheapest way to make a to make a PC/Tablet. Surface Pro Tablets Use Intel i5 CPU'S and they do not come cheap folks but they are absolutely needed to run a good Windows 8/ 8.1 tablet so do not be stupid enough to think of buying one for less than 400 to 450 dollars. if you want a do every thing Windows 8/ 8.1 tablet you need an Intel i7 CPU in it and the I7 CPU itself will cost more than an Android tablet. Some people say microsoft should stop making ARMS CPU tablets like the Nokia 2520 and the Surface 2 RT OS Tablets that would be a Mistake because in he Mobile world of tablets and smart phones the ARMS CPU is what is used not an expensive Intel i5 or i7 CPU. Microsoft is between a rock and a hard place People want to run x86 legacy programs on a tablet but do not want to pay the high cost for them and some People put down the cheaper more affordable Nokia 2520 and the Surface 2 Rt because they do not run x86 legacy programs. if the Nokia 2520 and the MS intel surface 2 OS tablets are given enough apps they would rival the Apple Ipads and the Android tablet. WOW microsoft sure has interesting Problems in the tablet world.

19. SemperFiV12

Posts: 949; Member since: Nov 09, 2010

Yall can argue all you want, but my Surface served me well... until I used it more than I thought I would and needed to get a 64gb one. Then I sold my Surface. Got a Surface 2. Have been even happier. And the friend I sold it to, happy as well. IT GETS WORK DONE. Some people prefer other tablets - whatever floats your boat sug. But there are MANY that use and enjoy the Surface, it is a great product. It is NOT PERFECT. But for some, it gets the JOB DONE... WELL.

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