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Microsoft's Surface strategy: As long as it takes


Brink

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#1
Next week, Microsoft is expected to launch a Surface Mini, and perhaps another, larger Surface device to add to its tablet PC portfolio. The idea of Surface Mini certainly makes sense; smaller slates are seeing growth, so a seven- or eight-inch model could potentially capitalise on that nicely.

The arrival of the third-generation of the Surface (perhaps a Surface Pro 3) would also help Microsoft's tablet prospects in another way: it usually takes tech companies three versions of any new device to fix all the flaws spotted in the product.

The first-gen Surface RT and Surface Pro tablets were released in October 2012 and February 2013 respectively. Their successors, the Surface 2 and Surface Pro 2, arrived in October 2013. But sales remain low, probably somewhere around two to three percent of the worldwide tablet market.

The numbers Microsoft has released about the Surface tell part of the story. Microsoft reported Surface revenue of $494m in its most recent third quarter report, but the costs associated with generating that revenue (which include manufacturing and distribution of the devices) hit $539m.

The same thing happened in the previous quarter, covering the three months to December 31 last year: Surface revenues hit $893m, but at a cost of revenue of $932m. In Microsoft's Q1, Surface revenue stood at $400m and the cost of revenue at $645m (before that Microsoft reported Surface revenue of $853m in its Q4 2012 — along with a $900m write-down on Surface RT inventory).

According to these numbers, Surface is still costing more to make and distribute than Microsoft is making from selling it.

So how long will can Microsoft continue to build 'tablet PCs' that are snubbed by consumers? The answer is probably as long as it takes.
Read more at: Microsoft's Surface strategy: As long as it takes | ZDNet
 

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labeeman

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#2
Microsoft's money pit: Surface has lost $1.2B

Computerworld - Microsoft has lost more than $1.2 billion so far on its Surface tablet business, an expensive experiment that makes tomorrow's revelations of new hardware an important milestone for the "devices" side of its corporate-refashioning strategy.

On Tuesday, CEO Satya Nadella is expected to step on a New York stage and unveil one or more new Surface tablets, and outline his direction for the in-house hardware project birthed by his predecessor, Steve Ballmer.
More
 

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mick823

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#3
Too Expensive

When I was in the market for a tablet I walked right past both Apple and Microsoft when I saw the price tags. $150 for a Samsung Android 7" device is what I ended up buying. My first tablet and I will be darned if I was going to cough up big money on something I wasn't even sure would be worthwhile.
 

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HippsieGypsie

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#4
Thanks for posting those, mates. :)

In perspective, this is pocket change. It is somewhat expected to lose money on a new ball field. It'll eventually come around.
 

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Tepid

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#6
When I was in the market for a tablet I walked right past both Apple and Microsoft when I saw the price tags. $150 for a Samsung Android 7" device is what I ended up buying. My first tablet and I will be darned if I was going to cough up big money on something I wasn't even sure would be worthwhile.
that makes your post irrelevant then.
You didn't bother to find out why they cost what they do.

Sorry a moped isn't going to give you the experience of a 650cc Motorcycle.

Riding the monorail isn't going to show you what it's like to ride a roller coaster.

The Apple prices are what they are cause, they roll the cost of the OS into the hardware cost.
If they were software only company, their OS price would compare to Windows.
But, they still overprice their hardware beyond that cause people are willing to pay it.
The specs don't warrant the prices they charge.
The Apple Chips are on par with the Nvidia chips used in the Surface RT

The Surface Pro is actually priced about right for the hardware in the form factor you are getting.
It's a Laptop class Tablet.

Surface RT also out classes the rest, and I would suggest it over the others.

But I guess it doesn't really matter to those where a price tag is all they look at.
 

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HippsieGypsie

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#7
Thanks for posting those, mates. :)

In perspective, this is pocket change. It is somewhat expected to lose money on a new ball field. It'll eventually come around.
Why do you think that? I don't remember Apple losing money for years with its iPhone and/or iPad..?
Here's part of a post I wrote recently to set a pace.

Now it's time to mention the other two tech giants > Apple and Google. What do they have to offer? Well, Apple makes more profit on hardware than anything else. That seems to be their specialty. Can businesses afford those kinds of prices? Might as well sell jewelry also. Google makes tons of profit on advertising and data tracking. That's their specialty. Businesses need that so far as marketing, but that's about it. Don't forget the integration of Bing in Windows. So what's MS' specialty? Same as it's been all along and what made them the giant they are > Writing software > Cutting edge software > MS Office suite being their mainstay.
I say that because of history, specialty, location, and fads. The old adage > Do what you do best. MS' specialty is software. Back in the day they were tied to the IBM-architecture PC. PCs were known as business number crunchers. They still are to some degree, but today we use them for all sorts of tasks. Apple and it's architecture was known for graphics color rendering (picture and video) because that architecture was better at that, but, again, today they are used them for all sorts of tasks. Apple has always been an expensive proposition to buy. IBM was based out of New York and Apple out of California. There is a certain stigma about MS being tied to a lower-priced PC. Along with the Steve Jobs guru following and fad of the iProducts, that will be hard to break through. I truly don't mean to cut down iProducts at all, but like I kiddingly tell my relatives and friends that have them that they're overpriced pieces of costume jewelry. :p

On the other hand Androids are very inexpensive, but do nothing.
 

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jimbo45

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#8
Hi there

Perhaps we should have some Business 101 tutorials in the Forum -- I'm amazed with so many people in the US in particular studying for Business degrees one way or another don't seem to have immersed themselves seriously at "Street Level" into a business to see how it REALLY works. (How many MBA's have we got on this Forum currently !!!!!:dinesh:).

1) If you don't innovate etc your market will gradually dry up and you wiill eventually go out of business. This costs a certain amount of money but often can be offset against Capital Gains Taxes (look at Pfizer - Viagra is one of its best known products but it needs something new now - trying to buy Astra Zeneca - loads of DECENT research into Cancer, diabetes etc drugs in UK - just because of a benefit of Capital gains tax - 35% in US , 20% in UK --> BBC News - AstraZeneca rejects 'final' takeover bid from Pfizer)

2) If you are new to a market as Ms obviously is in the case of mobile systems then you have a LOT of catching up to do and it will take time, money, and some re-think of strategy.

3) Your company is sitting (as a load are these days) on a HUGE cash mountain -- no good leaving it in the Bank at a miserly 0.5% --this is the time companies will try out new strategies etc --even if they have to BORROW money it's at a really rediculous rate.

4) Gigantic Hedgefunds are out there just LOOKINg for investment potentials -- the amount of CHEAP cash swilling around the markets at the moment makes it a No Brainer for decent companies to try a load of stuff even if at first sight it doesn't appea successful.

(These rates unfortunately aren't available to individuals who might be saying (rightly so IMO) why am I paying say from 17.5% to 24% depending on your circumstances for a Credit Card when Federal Interest rate is 0.5%. Someone is making Big bucks on that -- unfortunately that'sa topic for a whole different Forum).

Cheers
jimbo
 

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Tepid

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#9
I agree, and yes MS is going to lose money right now, due to being late as they are. But they have a very good product that begs for better advertisement.

They have to overcome already established markets, not always an easy thing to do. Especially against cheaper technology.

Their system and hardware are solid, very solid, to state otherwise would be disingenuous.

They unfortunately need to overcome a stigmatism perpetuated by bad publicity, rampant disinformation and an overzealous change to the GUI.

I hope they stay on track, and don't get further off track by going fully cloud at all.

Some cloud is ok, good in fact.

Yes, people need basic courses in economics 101. It should be a required high school course.
 

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alphanumeric

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#10
I wouldn't mind having one but at that price it was "full size laptop" or "Surface Tablet". At the time I didn't have either and couldn't afford both. I bought the full sized laptop. That fit in better with what I wanted and needed. I'd still like to have a surface but just can't justify spending that kind of money a second time. Not on my present income. I'm sure you get what you pay for but not everybody wants to spend that kind of money on something with a 10" screen. I'd also love to own an Aston Martin DB9 but don't have that kind of cash either. If I win the lotto maybe both. :D
 

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Tepid

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#11
And now for something completely contradictory....

It’s important to mention that our data is collected from almost 800 apps in the Windows Store and it’s safe to assume that these apps are used more on the tablets (and especially Windows RT tablets) than on traditional PCs and laptops, so the data is skewed towards tablet and touchscreen PCs. Having said that, it should provide a good overview of the ecosystem as a whole and specifically for developers building Windows Store apps.
AdDuplex Blog: A Glance at Windows Devices Ahead of the Surface Event
 

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#12
Sorry a moped isn't going to give you the experience of a 650cc Motorcycle.
I would hardly refer to Samsung's tablets as mopeds.
 

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HippsieGypsie

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#13
@ Jimbo

All your points are valid. Couldn’t agree more, however, let’s talk advertising. Don’t know about the rest of the world, but here in the U.S. most people here live in some kind of a Hollywood TV/Movie lala land, especially when it comes to commercial advertisement (and politics). Not all, but a majority have subliminal psychological messages in them aimed generally at the younger. It’s quite amusing. Mostly > “You’re nobody until you get this > You just got to have it to fit in! > You’re going to be popular when you get it!” Generally all aimed to start a fad. > MS’ Surface commercials of “Click, click, click, dance and jump around, click, click, click!” is one of them. It’s “cool” to have one. A “catchy jingle” approach to brain burn.

Don’t get me wrong. I was young once and bought some unneeded items I probably should have scaled down such as my black-stripes-over-red 1970 Chevelle SS 396 w/ cowl induction, four on the floor, and posi-traction. But, hey > One doesn’t get the girls looking when one has a four-door Ford sedan which was my first car. :D

A classic that hurled Apple forward was their “1984” Super Bowl commercial. Apple 1984 Super Bowl Commercial Introducing Macintosh Computer (HD) - YouTube
 

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HippsieGypsie

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#14
Sorry a moped isn't going to give you the experience of a 650cc Motorcycle.
I would hardly refer to Samsung's tablets as mopeds.
That's ok. The RT is a moped next to the Pro. :D

Hey! Good luck in the playoffs. It just may end up you HABS and the Hawks. Not as big a hockey fan as you, but I do live very close to the Windy City.

Black Hawks.jpeg
 

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#15
Deosn't seem like we're gonna make it past the Rangers, who are now up 2 games to none.:(
 

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HippsieGypsie

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#16
Fear not! We've seen so many come back before. The Hawks were early on. They could be winning a game 3-0 in the last period and lose in overtime. They didn't know how to close out a game. Not sure if they still do! :p
 

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#17

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pparks1

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#18
After watching the press event today, the new Surface Pro 3 seems like a rather nice piece of hardware.
 

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Coke Robot

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5,707
#19
You have to spend money to make money.

The same can be said of the Xbox. It doesn't make a ton of money, but would that have been worth not having the title of best selling console for two years straight, largest console market share, and miss out on being a huge cultural phenomenon? I would doubt that.

The Surface tablets are no different. They are the exceptional stage for everything Microsoft brought to the surface and there is yet to be a tablet out there that can really rival them in every category. Would the whole scope of Microsoft's ambitions be better left to OEMs to screw up and clutter with useless anti-virus software that doesn't work?
 

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System One

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lehnerus2000

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1,343
#20
All your points are valid. Couldn’t agree more, however, let’s talk advertising. Don’t know about the rest of the world, but here in the U.S. most people here live in some kind of a Hollywood TV/Movie lala land, especially when it comes to commercial advertisement (and politics). Not all, but a majority have subliminal psychological messages in them aimed generally at the younger. It’s quite amusing. Mostly > “You’re nobody until you get this > You just got to have it to fit in! > You’re going to be popular when you get it!” Generally all aimed to start a fad. > MS’ Surface commercials of “Click, click, click, dance and jump around, click, click, click!” is one of them. It’s “cool” to have one. A “catchy jingle” approach to brain burn.
I tried to explain this to a group of whippersnappers (a few years ago) and they refused to accept it.

Their position was, "Advertising exists for the consumer's benefit."
:doh:
 

My Computer

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    Windows 7 Ultimate SP1 (64 bit), Linux Mint 18.3 MATE (64 bit)
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    AMD Phenom II x6 1055T, 2.8 GHz
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    8GB DDR3 1333 G-Skill Ares F3-1333C9D-8GAO (4GB x 2)
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    Linux Mint 16 MATE (64 bit) replaced with Linux Mint 17 MATE (64 bit) - 2014-05-17
    Linux Mint 14 MATE (64 bit) replaced with Linux Mint 16 MATE (64 bit) - 2013-11-13
    Ubuntu 10.04 (64 bit) replaced with Linux Mint 14 MATE (64 bit) - 2013-01-14
    RAM & Graphics Card Upgraded - 2013-01-13
    Monitor Upgraded - 2012-04-20
    System Upgraded - 2011-05-21, 2010-07-14
    HDD Upgraded - 2010-08-11, 2011-08-24,

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