Microsoft: $853 million sales of Surface tablets from launch until June 30

Microsoft started selling Surface tablets in mid-October when pre-orders began for the Surface RT. Since then, the company has never released any sales figures for the Surface RT or the Surface Pro tablets that it launched in February 2013. Today, Microsoft finally offered some public information about how much money the Surface tablets have brought in from their launch until the end of the company's last fiscal year, which ended on June 30.

In a financial disclosure sent to the U.S. Securities and Exchange Commission, Microsoft showed that Surface tablet sales totaled $853 million during that time period. There's no word on how many of those sales were for the cheaper Surface RT or for the more expensive Surface Pro. However, it is likely the only numbers Microsoft will ever reveal so we should be happy that they offered any revenue breakdowns at all.

The revenue numbers are for sales of the tablets before Microsoft decided to lower the price of the Surface RT by $150 in mid-July. Microsoft took a $900 million one time charge in its last quarterly financial report due to that price cut. The company's CEO Steve Ballmer recently told employees at a company meeting that it is developing the next version of the Surface but details were not revealed.

Source: SEC via Geek Wire | Image via Microsoft

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I don't think there will be a fire sell to the general public, there will be one, but most likely to schools maybe?

I actually enjoy reading about how bad is Windows 8, we complained so much, and they did not listen, today I stopped developing apps for Windows all together, my software works on Mac OS, Windows, and Chrome OS, it is called html5

Edited by john.smith_2084, Jul 31 2013, 1:12am :

john.smith_2084 said,
I don't think there will be a fire sell to the general public, there will be one, but most likely to schools maybe?

I actually enjoy reading about how bad is Windows 8, we complained so much, and they did not listen, today I stopped developing apps for Windows all together, my software works on Mac OS, Windows, and Chrome OS, it is called html5

They already started the school deal, it was talked about on here a week or more ago. The reduced revenue from that and the price cut factors into the $900mil write down. That doesn't mean they're not making money in the end, just $900mil less than they expect when it's all over.

no matter how you put the numbers, it is something that is close to a million tablets, and less that 2 million.

iPads and Androids sold in tens of millions every year.

A lesson to Microsoft: Anger your customers, and they will not buy!

customer not happy == customers will not buy
customer != buy == no profit
!Profit == cost cuts
cost cuts == Microsoftians Fired!

All the above == natural selection in progress, eliminating the stupid and ignorant people at Microsoft.

john.smith_2084 said,
no matter how you put the numbers, it is something that is close to a million tablets, and less that 2 million.

iPads and Androids sold in tens of millions every year.

A lesson to Microsoft: Anger your customers, and they will not buy!

customer not happy == customers will not buy
customer != buy == no profit
!Profit == cost cuts
cost cuts == Microsoftians Fired!

All the above == natural selection in progress, eliminating the stupid and ignorant people at Microsoft.

That makes no sense whatsoever.

I wish they would drop the price of the keyboards. I need to get a Type cover as I find the Touch Cover hard to type on.

Strip marketing out for a second, but I don't care who you are, you're going to be happy with $858m worth of sales. If you aren't making a profit from that, then focus on cutting costs in other areas whilst obviously trying to grow total sales, but hell, that's still a positive in my books. That's a lot of money.

Given it's their first hardware product in this market coupled with an OS overhaul it's not bad, but even as a Microsoft fan, it's sort of a drop in the bucket compared to their $70 billion annual revenue stream.

Perhaps they should stop airing those anti-apple ads and actually use that money to release a product that is meaningful to customers. Like the HP touchpad, I'm still up for a RT or Pro tablet firesale

volodoscope said,
Pushing for Surface 2 is gonna be really hard for Microsoft execs.

Depends, the next surface devices will have better hardware for sure, and Win8.1 is a very nice update. The only thing we don't know about is the final updated version of the core apps, like mail (which we've only seen video of) and so on. The main problem IMO, with the RT was that the core apps were just bad and people thought they could install desktop apps. I think people will figure out the difference now and if the core apps are there and solid then the need for the desktop on a RT device is all but gone.

8.1 goes a long way to make it less desktop dependent for core tasks, just look at all the options added to the new pc settings app which used to be only in the desktop control panel in 8.0. That alone is big for tablet users and their overall experience.

So, 3 things, better hardware, better core software/apps and this new reduced price should work out well. $350 for the base Surface RT2 with better specs should sell just fine.

Hardware is too early and software too half-baked for any better sales than this. I expect an RT 2 with Snapdragon 800 and a Haswell Pro 2 to sell like hotcakes!

I can tell you now that I'm waiting for the next revision to purchase - current gen is a bit too heavy, etc, but with Haswell processer in the next revision i'd jump on it

john.smith_2084 said,
The WPF / Metro Engine behind the RT apps is pretty slow, even Core i3 struggles with some apps.

RT apps are not WPF! And they're far from slow (WPF is though)

Rev 2.0 is not going to help a product that is unwanted by general public. I'm going to say it now that Surface is a flop for Microsoft and that it should give up now before it has to write off even more units.

WARNING : BAD ACCOUNTING COMING UP.

If you average out the RT & Pro sale each to be $853 along with accessories then it would be 1M units.

Almost a billion dollars in sales for anything is substantial. Anyone care to try and break down how many units that might be?

At $499/RT and $999/Pro (average price, rounded up, in USD) that figure comes out to...

1.7M RT or 853K Pro or anywhere in between (e.g. 1M RT + 354K Pro). Either way, over 1M units overall.

I did some calculations, given the price of both Surface RT and Pro (Prior to cost reduction) and the given information. I also took note that the pro has been more demanding.

My calculations figure out to be about a bit over one million surfaces sold (both pro & RT combined). Assuming 60-70% were Pro sales, I would say Microsoft has sold 500 thousand or less RT, consistent with rumors we have been hearing.

Based on their retail prices, 2 RT sales = 1 Pro sale.

If only 500K RT units were sold, then about 580K Pro units were sold. Either way, still over 1M units.

Hahaiah said,
Almost a billion dollars in sales for anything is substantial.

Not if you spent the same amount, or more, in developing costs.

Nas said,
At $499/RT and $999/Pro (average price, rounded up, in USD) that figure comes out to...

1.7M RT or 853K Pro or anywhere in between (e.g. 1M RT + 354K Pro). Either way, over 1M units overall.

That's assuming all units were sold for full retail price through the Microsoft store. For units sold through Staples or Best Buy, Microsoft would only have received the wholesale price.

Thus, unit sales are slightly higher than implied by doing the division.

Rudy said,
So they didn't manage to sell half of their stock
That 900m write down is most likely much more complicated than that. Corporate accounting is a wild place.

Rudy said,
So they didn't manage to sell half of their stock

Not exactly. I believe I read the write down also includes accessories. Does the $853M include them as well?

They spent hundreds of millions in marketing, i wouldn't be surprised if they entered the game expecting a write down on this.

With that being said, Surface is another Billion dollar vertical for Microsoft and if they can get a 2.0 out the door that shows credible and strong gains in performance/features (8.1 + higher res + better performance + better battery) then they're on a strong foot.

spudtrooper said,
They spent hundreds of millions in marketing, i wouldn't be surprised if they entered the game expecting a write down on this.

Exactly $898 million in marketing.

I don't know why Neowin does not mentioned it (even when other sites are mentioning it).

I'm sorry but battery, screen and performance are not something public is gonna look at. It's pretty much given at this point. Public expects those things now. Apple and Samsung tablets sorted out these things years ago. Surface needs to be something visionary, something that makes you wanna buy it. Surfing the web might have worked for Apple in 2010. Now you need much more than that.

Surfing the web? You must be referring to apple or Samsung tablet. On surface you could write a PhD, save statistical material and presentations on excel and PowerPoint etc to the cloud or on the tablet itself, for later creating or editing off line, then sync to the cloud again. Or download 100s of songs at no extra charge beyond the $9.99 monthly Xbox music subscription fee and play them without internet access. Or edit photos or draw using PhotoShop or illustrator on surface pro. Or handwrite emails using outlook on Pro. Among many other real world applications

Gaffney said,
Also try and get it out worldwide within a month, not USA and Canada then the rest of the world 7/8 months later.

100% agree - but it seems to be a trademark of American business and them no grasping the concept that globalisation means treating the world as a single market place rather the stupid practice of segmenting.

Gaffney said,
Also try and get it out worldwide within a month, not USA and Canada then the rest of the world 7/8 months later.

I bet the 2nd gen devices do come out in more places at launch compared to the original. They have the retail deals in place now so only time will tell.

MrHumpty said,
That 900m write down is most likely much more complicated than that. Corporate accounting is a wild place.

Exactly, people think it means they have $900m in stock sitting around, that's not the case. Part of the $900m is the reduced revenue from the $150 price cut. The other is accessories as well, marketing, distribution costs and so on.

I think it was Zdnet I was reading and they, rightly, pointed out that the $900 million wouldn't just be tablets but also accessories and other costs (and, of course, anyone with any knowledge of accounting would tell that a significant portion of the 900 would be to cover up for the discount). Of course, all this has been mentioned before. What I was more interested in was that the article claimed a part of that money might be used for the next-gen Surface (any discounts or whatever they may have planned for it) but I'd say that's grasping at staws especially since you don't just write off losses from next fiscal year in this year because, for one, it makes you look bad (and the write-off has generated quite a lot of negative publicity, hasn't it?) and, also, because one of the most basic principles of accounting is matching - you apportion costs and revenues only pertaining to the current year.

not only that, but adding on to what other people said in regards to availability. make both models available at the same time, worldwide, and at many major retailers. at the beginning it was only on display at MS stores, which are very sparse to say the least. and even the demos I've seen at staples are so ****ty. the type cover didn't even work for one of them. they need to have better demos and showings.

How do you draw in Photoshop on 1920x1080 resolution of 10.1 inch display with no support for touch controls from Adobe? I'm sorry but that's total BS. And again, things you mentioned are not touch optimized, like new Office or any Adobe product. Spotify works on all devices not just Microsoft's.