Microsoft are losing money on Surface

2 May 2014

surface Microsoft's hybrid laptop/tablet thingummy, the Surface, is a novel enough idea, but sadly, they're losing money on it.

The company has released figures released which show how Microsoft is making a loss. To cut through all the boring nonsense, here's the lowdown - for every $100 Microsoft get in revenue from Surface, they have already spent $109.

It looks like they've made the technology version of the Blue Monday 12".

Microsoft say that the cost of revenue "increased due mainly to a higher number of units sold".

This loss is better than the losses they were reaping in previous years. In the last quarter, for every $100 of revenue, they'd spent $104. In the three months to September '13, revenues were $400m, but the cost of revenue was $616m. Overall, they have spent $116 for every $100 they've got back.

Sadly for Microsoft, while the iPad has done a roaring trade, their move into the market saw them releasing a product which has not sold well. Consumers obviously didn't see much need for Surface, and to those that did, the company made a loss anyway, so it's all a bit lousy for the company.

Microsoft acknowledges that Apple are bossing the market and said in their filing about "competition among platforms, ecosystems and devices" that: "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."

"Competitors pursuing this model also earn revenue from services that are integrated with the hardware and software platform. We also offer some vertically-integrated hardware and software products and services; however, our competitors in smartphones and tablets have established significantly larger user bases. Efforts to compete with the vertically integrated model will increase our cost of revenue and reduce our operating margins."

How long can they maintain a loss while trying to keep up with Apple?

TOPICS:   Technology   High Street News   Gadgets


  • JonB
    This isn't really news as Microsoft lose money on all their hardware, especially the Xbone. Amazon loses money on the Kindle and Google loses money on Android (e.g. paying Samsung court costs). They make it back by selling services, which for Microsoft would be business software contracts and Office365.
  • Mr M.
    The advert of that smug bloke on the train made me actively avoid Microsoft. I think their biggest problem is brand perception.
  • Alexis
    The bloke with the fishing hat does my head in. "It has new features, like my favourite apps" How can he have a favourite yet if it's all new?

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