Microsoft Surface

Why didnt Microsofts game-changing device sell as well as Microsoft projected?

Danica Roberts
Southern Polytechnic State University
EE 1000
I.
INTRODUCTION
The purpose of a business is to make a profit; the businesss
heads know that it will have to spend money in order to make
money. This being stated, Microsoft has plundered. In
regulatory filing made at the end of the Microsofts fiscal year,
it has been revealed to the general populace that its grassroots
device, Microsoft Surface, has caused Microsoft more
expenses than gain [1]. Why?
II. WINDOWS RT AND WINDOWS 8
When the rumors of another Windows OS were confirmed
as true at the International Consumer Electronics Show in
2011, the computer world was generally pleased, but some felt
that it was too soon; Windows 7 had been released in 2009,
and, in computer years, 2 years was not a lengthy age. Several
pre-release versions were released to the public. The new
interface, dubbed Metro, was received in a generally negative
manner for those who were pleased and satisfied with the
Windows 7 layout. To technology enthusiastsespecially
owners of Windows Phones, which have the Metro UIthe
new UI was considered intuitive to say the least.
Windows 8 is an operating system designed to cater to PCs,
laptops, and tablets. It supports most programs Windows 7 can
run, but is not compatible with Windows XP-geared software.
Windows RT is an operating system designed to cater to
mobile devices, specifically tablets. Unlike its Windows 8
counterpart, Windows RT is not compatible with x86-based
applications, as it has an ARM processor instead of a widelyused Intel processor.
III. FINANCIAL WOES
In a regulatory 10-K filing by the Microsoft Corporation,
the Surface brought in $852 million in revenue. However,
Microsoft also reported that there was an $898 million
increase in advertising costs associated primarily with
Windows 8 and Surface. These figures show that the net profit
is approximately -$46 million from Surface, so far. In addition
to this daunting figure, Microsoft had to shell out
approximately $900 million for a charge for Surface RT
inventory adjustments [1]. Inclusive in this inventory
adjustment is the $150 price drop Microsoft set for the
Surface RTfrom $499 to $349.
Directly following this price drop, Wal-Marts supply of
Surface RT was sold out, which led many to believe that just
maybe the price was finally [2].

IV.

TOUGH COMPETITION

Following the footsteps of Apple and Google in the

production of products like the iPad and Nexus devices,
respectively, Microsoft took the imitative and manufactured
their own tablet, making what is now the Microsoft Surface.
This move put the Surface in direct comparison with the iPad
and Android tablets alike. In a bold move, Microsoft has frontpaged a link that takes the user to a page specifically dedicated
to comparing the iPad to four Windows RT-ready tablets,
including the Surface RT (Fig. 1).

Fig. 1 iPad vs. Microsoft Surface

A. Pricing
When it was first released in February 2013, the 32 GB
Surface RT was priced at $499. The price was set there to give
it a competitive edge to the Google Nexus and iPad which are
priced at $499 and $599, respectively.
B. Functionality
In the comparison of spcecifications, the Surface wins the
iPad in the areas of external media ports, cloud storage,
printing, and visual duality with a microDS and USB port, 7
GB of cloud storage (opposed to iPads 5GB), and the ability
to snap two apps side-by-side [3]. iPad wins over the Surface
in battery life, with two hours longer to live.
However, the specifications that Microsoft highlights are
tailored in favor of the Surface. One of the most important
features of a tablet is its application selection, because thats
what tablets run. Many popular games and apps found in
Apples App Store are not found in Microsofts Martketplace.
Without these apps, the tablet is almost rendered useless, and
the Surface takes an excruciating loss in that area.
Although the Surface RT has been directly compared to the
iPad, it has not yet been publicly matched-up against an
Android tablet. This is because there are so many different

manufacturers who have created devices to do exactly what the

Surface RT is advertised to do. Many of these devices come at
a very affordable price, and so the Surface would not be able to
win over these devices.
V.

VI.
[1]

CONCLUSION

When releasing a new product, a company must look at its

competition, and how well its product matches-up against that
competition. When comparing the Surface RT to and iPad,
Microsoft does it with the assumption that the current iPad user
may look at its own device as incompetent and will gladly
trade that device in for a Surface RT. However, tablets are
generally used for simple tasks, and many people who own
tablets own a laptop or PC as well.
Asking technology enthusiasts to pick up a new device and
learn how to use it makes sense. But, asking the general
populace to spend their hard-earned money on a new device
was not a good game plan.
Therefore, this is the main reason why consumers are not
running in droves towardsthe Surface RT. When there are
devices that are sure to perform as advertised, like iPad and
Android-ready devices, there is no need to travel to the
unknown.

[2]

[3]

[4]

[5]

REFERENCES

United States Securities and Exchange Commission,

"Form 10-K," 30 July 2013. [Online]. Available:
http://www.sec.gov/Archives/edgar/data/789019/0001193
12513310206/d527745d10k.htm. [Accessed 31 July
2013].
M. J. Foley, "Did Walmart just sell out of Microsoft
Surface RTs?," 29 July 2013. [Online]. Available:
http://www.zdnet.com/did-walmart-just-sell-out-ofmicrosoft-surface-rts-7000018684/. [Accessed 31 July
2013].
Microsoft Windows, "Windows vs. iPad: Compare
tablets," Microsoft Windows, 2013. [Online]. Available:
http://windows.microsoft.com/en-us/windows8/compare?ocid=GA8_O_WOL_Hero_Home_Compare_P
os1_02#T1=microsoft-surface-rt&t1=dell-xps-10.
[Accessed 30 July 2013].
Microsoft Coporation, "Surface specifications," 2013.
[Online]. Available: http://www.microsoft.com/surface/enca/surface-with-windows-rt/specifications. [Accessed 31
July 2013].
Google, "Nexus 10 Tech Specs," 2013. [Online].
Available: http://www.google.com/nexus/10/specs/.
[Accessed 31 July 2013].