The Surface Damage Is Mounting At Microsoft

With close to $2 billion down the tubes and a new CEO more interested in operating systems than devices, the days of the Microsoft Surface tablet could be numbered.

Microsoft has lost $1.7 billion on Surface tablets since the series first launched in 2012, Computerworld’s Gregg Keizer reports. In a breakdown of the company’s SEC filings, Keizer calculates that the Surface business lost $363 million in the July 2014 quarter, its largest single-quarter loss yet.

See also: Microsoft Writes Off Nearly $1 Billion In Surface RT Inventory

For the full 2014 fiscal year, Keizer figures the Surface lost $680 million. The year before that, Surface losses totaled $1.049 billion.

The Surface Tension Keeps Mounting

Long story short, since Microsoft first rolled out the Surface as part of then-CEO Steve Ballmer’s vision for a “devices and services” company, the tablet has done little for the tech giant but hemorrhage capital.

Sure, there’s that $400 million deal with the NFL, which includes Surface tablets used by coaches and players on the sidelines (instead of binders and printed photographs). But that’s pretty much a big deal only to folks who obsess about how football teams do competitive intelligence … and maybe the coaches who really wanted iPads. NFL visibility likely won’t move the needle on Surface sales, or do much to impress the guy holding the axe—Microsoft’s new OS-obsessed CEO, Satya Nadella.

See also: With The Surface Pro, Microsoft Is Trying To Recreate The PC Market

On Wednesday, Microsoft launched the Surface Pro 3 in 25 new countries. For $799, customers get a 12-inch Windows tablet with digital pen. Yet in May, Microsoft pulled the planned 7-inch Surface Mini from its new product roll-out, referencing the reasons a month later in a company report.

Per a single sentence under the section headed Computing and Gaming Hardware:

Current year cost of revenue included Surface inventory adjustments resulting from our transition to newer generation devices and a decision to not ship a new form factor.

Portents of Surface’s fate can also be felt in an epic 3,000-word plus email Nadella sent to Microsoft employees in July. Throwing major shade on his predecessor’s plan to remake Microsoft in the image of Apple, as a “devices and services” company, Nadella stated the company’s mission was now to “obsess over reinventing productivity and platforms.”

You know, software and the cloud. “We will reinvent productivity for people who are swimming in a growing sea of devices, apps, data and social networks,” he wrote.

See also: Satya Nadella Proves That Microsoft Hasn’t Changed At All

Nokia is still on Microsoft’s hardware table, of course. The acquisition of Nokia’s mobile device business, which began under Ballmer’s tenure (and reportedly led to his ouster), was completed in July. Soon after, Microsoft announced the layoff of 12,500 Nokia employees.

If Microsoft doesn’t have the back of the handset division that was part of Ballmer’s dream, things don’t bode well for Surface, either. 

Lead image courtesy of Microsoft

Facebook Comments

New

Rising

Popular