Microsoft discloses weak Surface revenue

The company has also taken a large charge for Surface RT inventory adjustments

Microsoft's Surface tablet has earned the company less in revenue than it paid to write down unsold stocks of the device.

The company said in a regulatory filing with the U.S. Securities and Exchange Commission that the Surface had earned revenue of US$853 million in its fiscal year ended June 30. The Redmond, Washington, software company did not disclose how many units of the tablet it had shipped during the year.

Microsoft announced earlier this month it took a charge for Surface RT inventory adjustments of approximately $900 million. The company also saw a $898 million increase in advertising costs, associated mainly with the Windows 8 operating system and Surface, according to the filing.

Aimed to compete with Apple's iPad and other tablets, the Surface RT built around a ARM-based processor and running Windows RT operating system was generally available from October. The Surface Pro, which runs Windows 8 on an Intel processor, became available in February.

Microsoft decided to design and manufacture the product, to the dismay of some partners who were used to dealing with Microsoft as a supplier of software, rather than as a competitor in the computing devices market.

"A competing vertically-integrated model, in which a single firm controls the software and hardware elements of a product and related services, has been successful with some consumer products such as personal computers, tablets, mobile phones, gaming consoles, and digital music players," Microsoft said in the filing, while discussing its competition. The company said it also offers some vertically-integrated hardware and software products and services, but its competitors in smartphones and tablets have established significantly larger user bases.

The Surface has not been a runaway success in the market. Microsoft shipped about 900,000 Surface tablets in the first quarter of this year, giving it a 1.8 percent market share of the tablet market, according to IDC. Apple led with 19.5 million iPad shipments, a market share of almost 40 percent, followed by Samsung with 18 percent share, Asus at 5.5 percent and Amazon.com at 3.7 percent share. Overall, Windows 8 and Windows RT tablets, including from other vendors, continued to struggle to gain traction in the market, and total Windows 8 and Windows RT shipments across all vendors reached 1.8 million units, IDC said.

Microsoft said in the filing that it would continue to invest in the Surface.

Join the PC World newsletter!

Error: Please check your email address.

Tags business issuesMicrosofthardware systemstabletsfinancial results

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?