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Microsoft announces US$900 million loss linked to Surface RT

FY2013 Q4 earnings report highlights Microsoft's difficulties

Microsoft released its fourth quarter and full year earnings results recently. While the company's net income remains huge at US$4.97 billion, the company had to admit they were facing difficulties because of the declining PC market. Perhaps more important to its investors, Microsoft also admitted to a US$900 million “charge related to Surface RT inventory adjustments”.

It comes as little surprise that the RT is not performing very well. Reviewers and the public both have been near unanimous in their dislike of the comparatively expensive device. Still, it is curious that Microsoft would have stockpiled such a huge inventory of the unpopular tablet.

The Surface RT has been marketed as a productivity device, and while good on paper, the limited scope of the product makes it a hard sell in its price range. This is in part due to a still relatively barren Windows App store, but mostly to its high price (US$499) and expensive add-on keyboards (US$119-129). The situation is made worse still by the new lower prices of full Windows 8 devices, compatible with all legacy Windows apps, launched by other electronic manufacturers (such as the Acer Iconia W3 starting at US$379 and US$80 for the keyboard).

The American company also shot themselves in the foot when they extended the offer of free Microsoft Office to all 10-inch and smaller Windows 8 tablets, since Home and Student 2013 was one of the few advantages the RT had over its competition.

Microsoft tried to rectify the situation first by offering a free keyboard-cover with an RT, then by just cutting the price to US$350 (but removing the bundled cover), but the fact remains that there are less expensive or similarly priced choices available that can do more. Perhaps some kind of turn around could be achieved if the cover were included at the new lower price, though that may not leave much of a profit margin.

Despite the setback, Microsoft has reaffirmed its confidence in the RT tablet and OS and information has leaked that a refresh of the device is coming in the next year.

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> Expert Reviews and News on Laptops, Smartphones and Tech Innovations > News > News Archive > Newsarchive 2013 07 > Microsoft announces US$900 million loss linked to Surface RT
Craig Munro, 2013-07-20 (Update: 2013-07-22)