Microsoft Reveals Humiliating Surface Revenue

Dennis Faas's picture

Microsoft has revealed it generated $853 million in revenue selling its Surface tablet computer. Embarrassingly, that's less than the amount it recently wrote off in stock it no longer expects to sell at full price.

The revelations come just days after company chief executive officer Steve Ballmer reportedly told staff "we built a few more [Surface] devices than we could sell." That appears to be an understatement, to say the least.

This is the first time Microsoft has publicly discussed Surface sales in any detail. The information was made available through a filing with the Securities and Exchange Commission (SEC).

The $853 million revenue covers a nine-month period, from the release of the Surface RT last year through June 30, 2013. That also includes the first four months of sales for the higher-priced Surface Pro device.

Surface Profits Much Lower

While $853 million may sound like a lot of money, it's important to realize that this refers to revenue rather than profit.

Across Windows software and devices as a whole, profit was just under half of total revenue. That ratio is likely to be much lower for the Surface devices, which have a much higher production cost than software. (Source:

Analysts have also noted that the figure lends itself to a couple of unfortunate, if somewhat unfair, comparisons. For example, the $853 million revenue is less than the $898 million that Microsoft added to its advertising budget to cover Windows 8 and the Surface range.

Revenue Total Less Than Stock Writedown 'Loss'

It's also less than the $900 million Microsoft listed as a writedown for the Surface. This means Microsoft's inventory of Surface devices was worth less than first thought.

The most important figure, however, is the one that isn't listed in Microsoft's filing: the actual number of Surface tablets sold. Based on the revenue figure, though, it appears earlier reports that Microsoft sold 1.5 million Surface RT devices and 400,000 Surface Pros were, if not precisely accurate, in the right ballpark. (Source:

Compare that to iPad sales: it's estimated that, currently, Apple sells about 14 million iPads every three months.

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