Microsoft has revealed that sales of its Surface tablets totalled $853m (£562m) in their first eight months on sale.The figure suggests the company may struggle to make a profit out of the product.It has booked a $900m write-down on the value of unsold Surface RT stock after cutting the device’s price.
Its latest financial filing also notes that its advertising budget swelled to promote the machines.The filing says the Windows Division’s sales and marketing expenses were $843m higher in the firm’s last financial year than the previous one because of the launch of the Surface tablets and new Windows operating systems.
According to the Verge news site chief executive Steve Ballmer told staff that “we built a few more [Surface RT] devices than we could sell”, last week. The firm recently cut the price of the machines by 30%.
The RT designation refers to the fact that the tablets are powered by an ARM-based chip and offer a limited version of the Windows 8 experience.Users are restricted to running built-in apps or ones downloaded from the firm’s own Windows Store and this means they are unable to run titles such as the the full versions of other non Windows apps like Photoshop.
However, the RT versions of Surface are cheaper than the Pro models which are powered by Intel-made chips and run the full Windows 8 OS. The RT editions are also offer thinner, lighter and offer longer battery life.Many industry watchers have suggested Surface RT tablets were designed to appeal to consumers tempted by iPads or Android-based models, while the Surface Pro was meant to compete with laptops.
Critics of Surface, though, say the concept was flawed from the drawing board. It has an identity crisis because it can’t decide if it’s a tablet or a laptop, asserts Jay Yarrow, of Business Insider.
On Tuesday its chairman, Jonney Shih, told the AllThingsD news site that “the result is not very promising” adding that people still wanted to use a lot of classic Windows software that is not compatible with the platform.
As a result of this new trend, Microsoft has slashed the prices of it’s Surface RT tablets from £399 to £299, reducing the value of its unsold stock.
Information from BBC was used in this article.