Microsoft's Surface revenues and unit sales surge up last quarter despite shortages

Microsoft's Surface tablets seem to be gaining traction among consumers, even though the company still stubbornly won't reveal specific unit sales numbers. Today, as part of its financial report for its last fiscal quarter that ended December 31st, Microsoft said that it generated $893 million in revenues from Surface tablet sales between October and December 2013.

Those numbers are over double the $400 million that Microsoft said Surface tablets brought in for the previous quarter. In a separate PowerPoint presentation, the company said that Surface unit sales went up over twice as much compared to the last quarter. Also, keep in mind that from the launch of the Surface in October 2012 to the end of June 2013, it only brought in $853 million in revenue.

All of this is good news, but one has to wonder how much more revenue might have been brought in if supplies of Surface tablets had been able to keep up with the demand last quarter. As we have reported before, Microsoft and other online retailers suffered from shortages of Surface tablets since the launch of the new Surface 2 and Surface Pro 2 models in late October. Indeed, a quick check of the Microsoft Store website tonight shows only the 32GB Surface 2 and the 128GB Surface Pro 2 models are currently on sale; all the other four versions are out of stock.

One more thing to keep in mind: Microsoft also listed its Surface costs at $932 million for the quarter, which means despite the revenue surge, the division is still losing money. Hopefully the company can change that soon.

Source: Microsoft | Image via Microsoft

Report a problem with article
Previous Story

Apple executive: Convergence of iOS and OS X would be a 'waste of energy'

Next Story

Google hints at future bitcoin support for their payment services

51 Comments

Commenting is disabled on this article.

Got to give kudos to Microsoft with the Surface line. Microsoft truly created a unique flagship tablet that has raised the bar in quality Windows users have been expecting from Microsoft's hardware "partners" for quite a long time. The Surface given its years of existence has cradled more of a community and has gotten a lot more attention than any other Windows tablet prior to it.

Even now, Surface is a device everyone thinks of when they think "Windows tablet". I've seen more ads, product placement, and mentions of Surface than any other Windows tablet. By charging a more premium price (for admittedly a high quality product) and delaying some would-be features should give these hardware makers more time to create the compelling tablets that they should be making for quite sometime.

Companies like Dell, Lenovo, Sony, Asus, and some others have been creating much more compelling stuff with Windows. Acer was slow, but is getting there (I'm on an Aspire R7 right now). HP and Samsung (who's been Android-loving) are very much on the slow-end. I wonder where these companies would be if Microsoft never made the Surface as the quality bar.

Every time I have my Surface Pro 2 in public, at least one person is in awe and says they want one. I know it isn't all about the apps but to get people to move, they want their apps. That is a reality we must face...

I had a meeting mid week with a company that provides the core software we use in my business. Everyone on their team had an iPad and a laptop with them, I had just my 1st generation surface. The looks on their faces when they saw the USB port, office apps, keyboard, and battery life was photo worthy. They all agreed that it blew the iPad out of the water. We talked about the app store and even though a few key apps are missing, it had most of the necessary ones. They hate using the Ipads for presentations, then having to use their laptops to edit spreedsheets and save them to thumbdrives/print.

ndoggfromhell said,
I had a meeting mid week with a company that provides the core software we use in my business. Everyone on their team had an iPad and a laptop with them, I had just my 1st generation surface. The looks on their faces when they saw the USB port, office apps, keyboard, and battery life was photo worthy. They all agreed that it blew the iPad out of the water. We talked about the app store and even though a few key apps are missing, it had most of the necessary ones. They hate using the Ipads for presentations, then having to use their laptops to edit spreedsheets and save them to thumbdrives/print.

pretty much why i want surface pro 2.

People will eventually figure out that the Surface is a superior device compared to the iPad and any Android tablet.

I live in a very young, geeky area. I've only seen two Surfaces out in the wild. I attend grad school at UCLA, I can count the number of Surface sightings on one hand. Anyone have any idea what areas are seeing big sales? Honest question. I bring this up all the time, but my youngest brother is the GM at two Southern California Best Buys and they've never sold out.

JHBrown said,
I live in a very young, geeky area. I've only seen two Surfaces out in the wild. I attend grad school at UCLA, I can count the number of Surface sightings on one hand. Anyone have any idea what areas are seeing big sales? Honest question. I bring this up all the time, but my youngest brother is the GM at two Southern California Best Buys and they've never sold out.

I've only seen a single galaxy s4 in 12 months. Surely it hardly sells at all. /s

It's anecdotal to say stuff like that. At my local BB they didn't have a single Surface in stock. None. That's just where I live though. Nonetheless, bestbuy.com and indeed surface.com were sold out for what seemed like weeks. Either it's a shortage to make people think they're selling out OR an actual shortage. Perhaps it's somewhere in between; more demand and not as many units due to supply chain issues.

Anyway, I got an RT on that insane ebay deal that's going on today. 169$ including shipping? Yes please.

JHBrown said,
I live in a very young, geeky area. I've only seen two Surfaces out in the wild. I attend grad school at UCLA, I can count the number of Surface sightings on one hand. Anyone have any idea what areas are seeing big sales? Honest question. I bring this up all the time, but my youngest brother is the GM at two Southern California Best Buys and they've never sold out.

I saw quite a few at our campus, but that was largely due to the Indian crowd we have over here at UHCL. Not to generalize, but they all seemed to be very "hip" on having the latest stuff when it came to phones, laptops, clothing, etc. Thus, it didn't surprise me in the least when they started picking up Surfaces.

this is all true, in Calgary alberta over the holiday season people were buying a lot of windows based products, surface stuff was in short supply at both bb and futershop.

I go to UH-Main and I've seen maybe 10-15 since the fall. One of the people in my class groups has a Pro 2 with type keyboard and all that, and my roommate's friend expressed interest in getting one when he gets more money. My mom has the original RT version. I'd get one myself, but I really wanted a hybrid touch laptop over a tablet.

I wouldn't mind a Surface 2 or Pro 2 for extra mobility reasons though.

They shot themselves in the foot. I guess after the write off, they were afraid to order more again, and caused the shortage inadvertently.

I guess just like MSFT is faking demand, and faking shortages they are also faking money. clearly, the deniers won't have it any other way.

Really wonder why supply is low, I know they're probably playing it safe and don't want to make too many again but this time they made too few. I wonder if they're planning to replace some models with newer LTE versions and so on? Or it could be a hardware supply issue in the chain.

neonspark said,
or they are just selling more. you know, the logical choice.

They are selling more I'm sure because the revenues show that, just wondering why the shortages for so long? Holidays are over and there's always a drop in demand for things but who knows how many they're making?

I think that it was a supply problem. Both, Intel and Nvidia had some issues with their SoC. Intel just switched to a newer and faster SoC for the Surface Pro 2 and Nvidia had manufacturing issues with Tegra 4.

I don't get the massive demand for mobile internet, I mean I know why and can understand a certain amount, and I don't know if its because of differences in contractual behaviour in the UK (Where I am), but I would much rather have a single device and a single SIM card along with single bill for my data connection when out and about, when I want to use my laptop/tablet/phone its all the same connection (I share from my phone, in 2 clicks, my 4g EE connection is shared as a wifi hotspot).

I understand from a business perspective but only as in the top guys don't want to be hassled and have the cash to throw about for multiple data contracts, but the demand seems to be way over inflated IMO, I'm happy to be corrected on this though.

Got a surface 2 finally after a month of looking.. it is worth waiting for. Best tablet for my purposes. Productivity + regular tablet browsing, music etc. The speakers suck, the interface is not optimized too well for the scaling, but still workable. Love the desktop mode freedom to connect external drives and play stuff. Perfect balance of a PC with the restrictions of a tablet OS.

vraev said,
Got a surface 2 finally after a month of looking.. it is worth waiting for. Best tablet for my purposes. Productivity + regular tablet browsing, music etc. The speakers suck, the interface is not optimized too well for the scaling, but still workable. Love the desktop mode freedom to connect external drives and play stuff. Perfect balance of a PC with the restrictions of a tablet OS.

I'm not sure what you mean the interface not being optimized too well for scaling but you can change the size (and amount) of tiles displayed. By default its three rows but you can turn it into four rows.

Ronnet said,

I'm not sure what you mean the interface not being optimized too well for scaling

Perhaps he meant the desktop, not the start screen.

eddman said,

Perhaps he meant the desktop, not the start screen.

YEah but the desktop has tons of scaling option. Has had it for years so I figured he was talking about the new interface with less customization options.

vraev said,
yup... i meant the desktop ...office interface scaling.

Could you explain what you mean with that? Do you mean its not designed for touch? It isnt but there is a way to enlarge the office UI.

I got the 256GB version for the 8GB RAM when they were back in stock after the first time they went out of stock. That was on boxing day. I checked the site out of habit. It was a good thing I did. The 64 and 128GB versions with 4GB RAM were you of stock within a mere 12 hours. I also got the original touch cover- white on sale for $50. I wanted the type cover 2 but it was sold out & I plan on getting the power cover when it comes out anyhow so I couldn't justify spending $140 on a two month accessory

dbam987 said,
This is awesome news for Win8 app store developers.

There is not going to change much on that front. Win 8 app store will remain lacklustre.

Auditor said,

There is not going to change much on that front. Win 8 app store will remain lacklustre.

Because?.... I see no reason why the store is that bad. There are plenty of quality apps.

ians18 said,

Because?.... I see no reason why the store is that bad. There are plenty of quality apps.

Because people that hate on MS love to give their own facts out of their ass

Auditor said,

There is not going to change much on that front. Win 8 app store will remain lacklustre.


What do you mean remain lackluster? I think Win 8 apps are prettier and more elegant compared to ipad to android versions. If the apps are few or lacks some feature that is another story. but your point is irrelevant here.

nickcruz said,

Because people that hate on MS love to give their own facts out of their ass


haters gonna hate and tear apart themselves. eventually what is more elegant and fundamentally designed better is going to be the winner.

Auditor said,

There is not going to change much on that front. Win 8 app store will remain lacklustre.

Uhm what? It's an awesome store and its growing faster then iOS and Android did on tablet.

Ronnet said,

Uhm what? It's an awesome store and its growing faster then iOS and Android did on tablet.

Desperate times calls for desperate measures!

JHBrown said,
Desperate times calls for desperate measures!

After 16 months the iPad had 100,000 apps in the store. Windows 8 reached this milestone after 8 months. In its first year Windows store grew twice as fast. True enough since then the speed has slowed down. We're now into Windows 8's 15th month and close to breaking 150,000 apps. Still 50% more than the iPad.

I love people that say there are no apps - how many apps to you need? Be honest how many apps do you really use on you phone for example? I suspect it is less then 10. I don't care about quantity but quality! Win8 store has almost any app you could want an in many cases the 3rd party app is better then the original. This goes for win8 and also windows phone 8 as well.

besides which the internet explorer supports flash so you can just use a webpage instead of needing glorified 'website-launcher' apps. My iPad has a specific Scotiabank app, but the Scotiabank webpage on my Surface is better, no app required.

Auditor said,

There is not going to change much on that front. Win 8 app store will remain lacklustre.


yea, same way the wp app store has remained lackluster?? anything can improve over time, as any situation proves.

Auditor said,

There is not going to change much on that front. Win 8 app store will remain lacklustre.

Well, at least windows 8/RT have a proper internet browser that negates the need for most apps, not some limited, mobile version found in iOS and android.

krobin said,
I love people that say there are no apps - how many apps to you need? Be honest how many apps do you really use on you phone for example? I suspect it is less then 10. I don't care about quantity but quality! Win8 store has almost any app you could want an in many cases the 3rd party app is better then the original. This goes for win8 and also windows phone 8 as well.

Agree with this... I have about 25 apps on my iPhone. How many do I really use from day to day? About 4 of them lol.

JHBrown said,
Desperate times calls for desperate measures!

Its interesting all haters use the same wording. hate speech. I know you don't like yourself deep inside. don't be shy, open your heart.