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The bigger tragedy behind Microsoft’s 900 million dollar Surface RT write off

So you should all know the story by now.

Microsoft messed up and made too many Surface RT’s. You (the general public) didn’t give a damn and now they have to take the fail and declare the loss.

It’s pretty awesome that Steve Ballmer came right out and admitted that they made too many devices. It was candid and refreshing. The real (more important) challenge for the company though is figuring out why this happened and how to make sure this never happens again.

The fact that the RT was going to fail this hard was pretty obvious for the following reasons:

It was too expensive

At approx $600, it just never ever made any sense. It was competing with Android devices and Apple devices that had more PERCEIVED value.

I had friends tell me all the time that Surface was different because it was a “real” computer with a keyboard. It sounded like crap then and it turned out it was.

It was an inbetween device

Not quite a laptop and not quite a tablet, it seemed like a new and innovative device. The problem was (and still is) that for most people looking for devices, they usually want one or the other. In my review earlier, I tried to figure out what to do with it but the iPad and laptop kept winning out.

The screen was too small

I have a 15.4 inch laptop and the screen is only barely lareg enough for all the things I need to do. The Surface doesn’t have enough room on the scree IMHO.

The ecosystem wasn’t ready

Not enough apps at the time. Nuff said.

The supply chain was awful

The whole Surface rollout was a disaster. The demand for the devices was sky high in the Los Angeles area but for weeks they only trickled into the stores. By the time supply caught up, no one gave a damn.

The commercials sucked and were in the wrong order

It took Microsoft MONTHS to start running the appropriate commercials against Apple. MONTHS. Those ads should have been ready to go a month before the launch date for Surface.

Surface versus Ipad

Surface versus Ipad

Now they seem cute but the timing lessens any sting they had.

On and on it goes.

So, the question is, how did Microsoft get all this so wrong in the first place?

Having run technology sites for so long and being agnostic (use whatever makes sense and not be a fan), it’s clear – groupthink.

A bunch of execs at Redmond got together and convinced themselves that this would be a great idea. Microsoft continue to attempt to make their products valuable and useful simply by sheer force of will. It’s reflected in the fanboy mentality “It’s not an Ipad, it’s a real computer”.

The massive irony here is, it would clearly have been better for Microsoft to have priced it at $249, sold out of all of them and taken a 1.8 Billion dollar loss. Because at least at that point, there would have been a ton of Surfaces out in the market and you could make the argument that any losses were loss leaders.

At this point, I am starting to hear all the same BS about the next generation of Surface devices and it goes like this “They will have the new Haswell chips so the battery life will be awesome…”

My 10 cents here. If you want Surface Pros and Surface RT’s to sell – make sleeker, faster, sexier and long lasting devices. Then make the RT device $299 and the Pro $699. Then aggressively push the Surface Pro to corporate and do volume discounts ($499 each).

Surface Pro has the best use case as a corporate device and RT is only attractive when it’s insanely cheap at this point. Microsoft need to make it a no brainer to get and keep one and then start to seduce the customers who buy.

That’s my take – what say you?

Use the comments below…

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  • http://www.cse.iitb.ac.in/~pratnala Pratyush Nalam

    Agreed!

  • Ezra TheITGuy

    So all these reasons never came to their mind before they started production?

  • Alberto Gorin

    wy not a home user tablet
    a professional tablet
    with windows 8.1
    i am a home user.
    only i do is e mails and youtube
    home user is very affordable.
    bill gates i understood every one needs a home computer
    compact tablet pc affordable.maybe steve ballmer sit in his own world
    does t see the world outside

  • Guest

    The major problem with Surface RT is being stuck with Internet Explorer. The experience is extremely slow and shoddy especially when running social networking sites such as Facebook, Linkedin and Twitter. Found Surface PRO to be light years better although bulkier and more of a desktop replacement notebook than a Tablet.

  • Dustin Refos

    I still wouldn’t buy the RT for $299.. too expensive.

  • Robert W. Burnham

    RT’s worst enemy is Windows 8 x86.

    The Windows 8 tablet I use is an Asus model that cost 450 dollars. It’s a full x86 version, not RT. It’s slim, fast, energy efficient, and does everything an RT tablet would do, plus more. Between Windows 8 being memory friendly and Intel’s Atom CPUs being so energy efficient, we simply do not need a gimped ARM version of Windows.

  • 1stkorean

    I agree with Dustin Refos below, $299.00 is still too expensive. Even if MS pulled a HP and made the RT $99 & $149.00, I still wouldn’t want it. MS needs to Drop the RT completely reduce the price of the Surface Pro and put their attention into making it awesome. MS can do that.

  • Frank Smith

    This to me was about the SAME thing that Steve Jobs did, (My Way or the HiWay) well the public is fed up with
    Hi cost, None working JUNK, next maybe they will start to figure out… all the other $400 to $600 CRAP is not worth it.

  • Lifewomusic

    You’re
    Right On! You’d think that microsoftee’s would carry their competitor’s
    products with them? They’re in need of a crystal ball concept or a prism, a conduit
    that holistically filters the haves; wants and the needs too. You’d think that innovation comes by being
    bold on every facet of ops. The truth of the matter is you have to be bolder to
    go beyond the norm beyond where no company has gone. They need to change the
    infrastructure to allow goals and changes to surface and materialize and yet value
    all those ideas and concepts. They need that prism to go beyond be cutting edge. They need a vision
    to holistically be bolder. The person at the top will be a mover shaker onto
    another prism that shine outward and beyond…………..
    Yes! Way cheaper now!

  • Richard Adams

    It’s the same BIG mistake they made with Windows CE – not understanding their equilibrium price. When WinCE machines with full-size keyboards came out (similar to more modern netbooks), history now shows they were a good idea with a lot of potential, but they were about TWICE what anyone might have been willing to pay for them. That was a major missed opportunity, and here they go, invading Russia in wintertime AGAIN.

  • Harsh Patel

    Damn, those higher authorities are so dumb!! Microsoft have seen in past (O/S Vista) regardless the type of product. They haven’t learned anything from their past mistakes.

  • Edward Allen

    This is sad but true! Surface was an attempt to emulate I pad and Android devices. It failed miserably. And what is this about x86 systems being a mistake? It is not a mistake as far as desktop systems are concerned. The ability to run some of the older apps and still make use of the lightning quick quad core AMD processors running a 32 bit subsystem under the main 64 bit system is a very convenient marriage. This is especially true for users like myself who use a PC mainly for personal business and social networking but do not need on the access to my information on the go.

  • aseries

    Think IBM PC JR.

  • WillyThePooh

    I got a surface RT when it reduced the price to $500 including keyboard. It’s a great device. Same price with the low end iPad. But it’s expandability and usable file system are what iPad lacks. I still use iPad to play games. But for other tasks, I fall back to my RT. I used Android tablet and found it’s junk. Never touch it again.

  • cjk

    The RT is a tablet class device. Tablets have been out long enough now that the “new” has worn off and people do not buy one just to find out what the hype is all about and see what it can do. Everyone knows a tablet can only do about half of what a laptop can do and is only slightly more portable. To successfully compete in the tablet market of today the price point has to be well below laptops which start at $300. Any exec who looks to Apple for a business model doesn’t understand reality.

  • Ray C

    I think price was the main issue. Although it has the potential to do a whole lot more than other tablets. I’m not sure people want to pay more for it than they would a laptop or another tablet. They want a tablet that does more than the others but around the same price. There are a million articles out there about how MS should have made smaller Surfaces from the beginning, but now the screen is to small?
    I’m sorry I just find people saying they wouldn’t get a Surface RT at half the price laughable. There is still a large market for people who want a tablet to do basically the same thing they do with their phones. All the people buying iPads and Androids are not doing any real work. Anyone who thinks the days of people wanting tablets just to have one are over is fooling themselves. Maybe only the Pro is acceptable to you, but why would you not want a device that’s less than the iPad that does more? I don’t think RT is the problem as much as MS not clearing defining RT and deciding that one device is going to be 100% tablet and the other Windows device are going to be laptop replacements.
    I agree they should have had it available more places and ready to ship from the beginning. I don’t know what they were thinking.
    As for the ads, I had no problem with them. Yes, they probably should have run the ad about what iPad can’t do before Surface came out. They probably should have run ads similar to the “What Windows 8 can do” ads. But I don’t think there is anything wrong with the ad they did run by itself. They should have just run others. Ads are about creating a buzz, and a lot of people buy stuff off the coolness of the ad more than the details of one.

  • Jamie Coats

    I agree so much with this, plus… The issue for me is I want to stay a Microsoft user but I use tablets more and 8 and disappointingly 8.1 is simply not a tablet touch UI. So many annoying things, some silly and should have been corrected and others are quite material. Surface as a tablet is too heavy and bulky, even RT, and the in Apps use of menu’s is fiddly. Try using IE, Outlook in touch mode. Additionally when typing the apps don’t position themselves when the keyboard appears. I want to keep using RT but the RT version should have been solely touch centric as should the apps. Conversely when I want to do real work I want a proper computer or Laptop and Windows 8 on a PC is off putting that I’ll switch to a Mac. So in my case I’m Android and iOS for tablet and the mess that is Windows 8 has pushed me to Apple PC’s as its a better desktop UI after the changes made to Windows really make it awkward.

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