

Microsoft reveals $900M write-down on Surface RT tablet - maximilianburke
http://www.cbc.ca/news/business/story/2013/07/18/business-microsoft.html

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hbharadwaj
Opinion: RT was an interesting strategy and most people in Steve Ballmer's
shoes would have taken the same bet. It came at a time when Microsoft didn't
have a tablet to compete with iPad. So, what did they do? They converted their
existing Start interface to occupy the entire desktop into Metro Mode. If you
think about it, the desktop was always a huge waste of space. After they
converted, Microsoft had couple of major issues - if they allowed for tablets
running legacy apps or forced x86 on tablets, people would ignore the new
interface and continue building legacy apps. The new metro was going to be
used by their phones and game consoles in a one screen, 3 devices policy and
in case they didn't have metro apps, their phones and consoles would suffer.
Windows was always the driver - it had to be. So, they decoupled desktop from
their new interface and put it in a new set of devices supporting low powered
ARMs.

And as such, current Office is never really meant for Touch. So, I am guessing
they were forced to bundle a pseudo-desktop along with RT to support Office
which is also a cash cow. Would they have loved to remove Desktop completely?
I would bet so.

Maybe Microsoft foresaw that x86 prices would fall, power would increase and
battery life would increase etc., but they had to continue down this road and
take a hit because they needed metro apps. My bet is that they were willing to
take the hit. I don't think anyone in Microsoft had the impression that RT
would come save the day. It is a necessity because of their new direction. If
RT designs in app interest being generated, I would say that it did it's job
to some extent. Of course, I don't know how this will play out but according
to me, these are some very daring decisions being played out at MSFT and I
would say better than Google.

~~~
Steko
"most people in Steve Ballmer's shoes would have taken the same bet. "

That's why you look for a CEO that isn't most people. The CEO isn't a service
award you hand out to the general who won the most battles 30 years ago.

~~~
hbharadwaj
Well, I used it in a casual way for making it seem like an obvious decision -
the perception having been part of my opinion.

Please allow me to correct myself - Most people wouldn't have taken the bet
nor have the insight to do so. Steve Ballmer or maybe Steve Sinofsky or
someone did. And they are not most people.

It's a billion dollar strategy. Not easy to make.

~~~
coldtea
> _It 's a billion dollar strategy. Not easy to make._

Well, since it was lost, it was quite easy.

And it's not their first billion dollar down the drain strategy.

~~~
iaw
The problem with Microsoft (since it's inception) is a complete lack of
originality. The company is based upon intellectual theft and dominant
business strategies. It worked for years and years but the ecosystem has
evolved now.

Microsoft has been chasing Apple since they released the Zune with some vague
hope of success. The sad thing is there are a number of exceedingly talented
individuals working at the company, it just sounds like innovation was
strangled by corporate culture years ago (if it ever existed there).

~~~
beagle3
I saw my first Microsoft store a month ago. It looked exactly like the Apple
Store I just came out of - except the tables had a different shade, and there
was nothing comparable to the XBox360+Kinect station in the Apple store.

They've been copying "things that work" for so long, and up until a few years
ago, it just worked. And now that it doesn't, it seems that they have no idea
what to do.

~~~
iaw
You actually bring up the one exception that I failed to mention. The XBox was
a pretty idea by Microsoft and it's implementation was fantastic (it's
revenues a drop in the bucket compared to other departments but still).
Kinect, while a blatant response to the Nintendo Wii's accelerometers has
opened up some very interesting possibilities that were previously only
limited to academic level research...

In that regard I think that the XBox team is probably the only well-ran unit
in the firm.

~~~
beagle3
I'll disagree here.

The first XBox was basically a PC with an exact spec. The 360 was plagued by
RRODs. I know 5 people who own XBox 360, and every single one of them was
either on the 2nd or 3rd console due to malfunction.

The Kinect was not developed at Microsoft - the camera and original skeletal
modeling is from PrimeSense (although later MS took over the software part, at
least). It was a marketing response to the Wii, true - but it's a third party
product they bought.

"Only limited to academic level research"? I had a chance to play with the
commercial ZCam almost two years before the Kinect came out; And ZCam wasn't
the first product.

> In that regard I think that the XBox team is probably the only well-ran unit
> in the firm.

Have they turned a profit yet? I suppose they have by now, but they went
through at least 4BN in funding before they did (if they have indeed). It
might be well-run, but without real evidence I can't assume that.

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mikestew
The Surface RT experience was summed up best for me by the wife of a Microsoft
employee and friend of mine: "it makes me feel stupid". I guess she'll be
sticking with her iPad.

Me, I didn't think it was _that_ bad. Though I, too, wondered "why wouldn't I
just buy and iPad?" Seems that's a question everyone else asked themselves.

~~~
mjn
Not sure it'd be sufficient, but the entry-level model is considerably
cheaper. $350 for a Surface, $500 for an iPad.

~~~
shinratdr
As of a couple days ago, and you're choosing to ignore the true entry level
device in the iPad line, the iPad mini which can't match on specs but does
beat it on price, portability and form factor.

I can't think of a single person I've talked to about purchasing a tablet that
considers specs except for myself so that's hardly the motivator some would
make it out to be.

~~~
seanmcdirmid
High resolution screen on the iPad 3 was great. That was one important spec.

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Mikeb85
The surface was always destined to fail. People tolerate Microsoft because
it's been the de-facto standard for so long, Apple hardware and Google
services are what people enjoy.

For higher end tablets the iPad is the winner, for the lower end the Nexus 7.
For open-source junkies the only real choice is Google, regular consumers can
use either (based on the popularity of Android).

Where does MS fit in? From their lousy image, to their WTF? commercials, their
archaic business model and poor services, no one wants an MS product.

~~~
purplelobster
To each his own, but I just bought a Surface Pro and love it. It replaces a
laptop and tablet and more, it's my main (and only) device from now on.
Windows 8 makes total sense for a tablet, and is not in the way when I'm
coding (hooked into a real keyboard/mouse/display). The killer feature for me
though is the Wacom pen which is absolutely fabulous. I have like 10 notebooks
spread out at work and at home with my notes, thoughts, diagrams,
illustrations etc. Writing notes and todos in a text-editor feels like a
straight jacket, but with the Surface it's even better than paper. I have an
infinite drawing surface, I can zoom in and out, move stuff around, mix
drawing with typing, draw diagram boxes, circles, insert images, copy and
paste, undo, erase, share digitally etc. Now I can keep my notes all in one
place, backed up and searchable. Writing with it even feels better than paper
for me (not sure if being left-handed has anything to do with it), it's very
responsive, has a sharp tip (unlike any pen you'll find on capacitive screens
like the iPad). It just all fits together very nicely. This is the new PC,
this is the productivity device I've always wanted. Being the Surface 1.0,
it's not perfect, so I'll be transitioning to the Surface 2.0 when it comes
out so that I'll get 9-10 hours of battery life instead of 5-7 now.

Would also like to clarify that the Surface RT is as useless as the iPad, if
not more because of the lack of apps. Having Office on it might make it worth
it for some people though.

~~~
ximeng
What software do you use for note-taking? I also have a surface pro and am
also very happy with it despite a few minor problems. For me there is
occasional poor response to multitouch scrolling on the touchpad, and
sometimes the cursor stops responding to the touchpad until I press escape.
Also no middle click on the touchpad is annoying, no right ctrl bugs me, and
not having separate pgup, home etc. keys is not convenient. Nowhere to put the
pen when charging either. I hope at least some of these problems will be
resolved by driver updates, e.g. nothing to stop Fn+F acting as Ctrl+F.

Despite the above, the specs, design and portability of the surface pro were
better than anything I found when buying it . I get a tablet while still being
able to work, which for me requires access to MS software including office.
It's comparable with ultrabooks but with the stylus support and detachable
keyboard it's just about in a league of its own, though some products are
close nothing seemed as well designed, featureful or portable at the price.

~~~
purplelobster
I prefer the desktop version of OneNote, the app store version is neat, but
missing some essential features. The type cover is not that great, but mostly
I'm "docked", so it's not that big of a problem.

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nickfromseattle
They are basically giving these away at Microsoft conferences. The last three
I attended had them for sale at:

RT w/ keyboard for $110 (retailed at $699)

Pro for $399 (retails at $999).

I tried picking up a couple to resell for profit but there is zero demand.
Nobody responded to my ads on Craigslist, Facebook or Twitter. Ended up
selling them for cost.

~~~
Everlag
If they could sell them at those prices, because of course resellers would be
quite unhappy, I could imagine just about anyone making an effort to integrate
them into their workflow.

The surface would no longer be something to work into a routine because it was
a big expensive toy but rather a system that has a genuine use case.

Hell, if they could get the worst rt into the ~300$-~350$ range Microsoft
could compare an rt to a nexus 7 and that would be their best bet to get the
most sales.

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anigbrowl
This is sort of beside the point, but I've realized who Steve Ballmer reminds
me of; it's Gru in _Despicable Me_.

I feel like this might be part of Microsoft's problem; I definitely do not
want to buy anything from that angry guy in the photo, even though I consider
myself something of an MS fanboy.

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reiichiroh
Office 2013 (desktop mode in general) is most certainly not optimized for
touch. Its touch targets in menus, dialog choices, radio buttons and ribbon
items are teeny tiny on my Surface Pro.

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sleepybrett
The 'iPad Killer' folks.

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iyulaev
I paid about $600 for a Samsung 500T and I think it's a great device, albeit
for a small market. I bought it because it was effectively a 1kg netbook with
a 10 hour battery and a stylus. It's not as good of a tablet as the iPad but
it's a real computer, which makes it great for running office, gcc, CAD
programs, and all that "on the go." When I need to do some reading I pick up
my iPad, but as my super-portable meeting/lunch/whatever computer the 500T is
a big winner. Given that an x86 processor (Atom) can get 10 hours in a tablet
I'm not sure what the point of RT was though.

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malkarouri
I wonder if such things should be evaluated in terms of the knowledge and
experience they gained the company. I would say the Surface RT experience has
reflected a lot on their experience and strategy developing Windows 8 and
Phone. If (say) the experience is reflected in the level of success of Windows
Phone 8, then may be overall it is a net success for Microsoft.

I think every company (like Microsoft, Apple, Google did) need to maintain
software and hardware divisions, if only to get the feeling what are the
software current needs in an evolving hardware profile.

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elorant
Well the good news are that now we could get a SurfaceRT really cheap
considering that sooner or later all the retailers would try to dump their
stock.

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wingspan
Is it just me, or was that article constantly confusing million and billion?

~~~
jpreiland
Yeah they have 4.97M in large bold letters and then 4.97 billion shortly
after. Also in the last paragraph they do it again with the $19x and $20x
figures.

~~~
jussij
Yep, as you point out the figures are all over the place.

The last error is a real clanger:

> Revenue grew 10 per cent to $19.90 billion, also below the $20.72 million
> expected.

Based on those figures revenue was in fact up by about 20,000 per cent.

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fludlight
Commercials with dancing people might sell clothes and booze, but they don't
work for technology. I could barely tell what the product was until the end.
And I still don't know why a Surface is better than an iPad.

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gtani
and... the 8" win8 tablet is here. The first reviews are... consistent!

[http://www.seattlepi.com/technology/businessinsider/article/...](http://www.seattlepi.com/technology/businessinsider/article/People-
Are-Totally-Bashing-The-Newest-Windows-8-4673037.php)

~~~
shinratdr
Acer just doesn't get tablets. I can't think of a single Acer tab worth
owning, the entire Iconia series is a joke, cranked out to be $20 cheaper than
the next guy at the expense of everything that matters. Screen quality,
network connectivity, build quality, all complete crap.

Letting them launch the first diminutive Surface tablet and allowing that
thing past Microsoft QA is a huge mistake on the part of Microsoft. I can't
believe they allow their hardware partners to screw them that badly when they
have facilities in place to stop it

They can't do much about some terrible laptop that shouldn't exist, but the
licensing for RT is far stricter. How about using that ability and keep crap
like this off the market.

~~~
fdm
>the licensing for RT is far stricter

The OP and the article are talking about the Acer Iconia W3 that runs full
Windows 8, not Windows RT.

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locusm
Windows 8 Metro Apps on the desktop warned me off ever buying a tablet. The
apps feel fisher/price, noddy apps and "good for demos" \- not for getting
stuff done. If you don't believe me just start with a fundamental app like
email. Ill wait for you here with a box of tissues...

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gcb0
isn't the RT already the cheaper option?

they should lower the $1k pro so then ipad and air would have decent
competition.

~~~
teamonkey
The RT was released very slightly cheaper than the iPad but the hardware specs
were miles behind the iPad.

It's not a bad device, there's just no real reason to own one over the
competition at that price.

If they'd thrown in the keyboard case AND Office for the price they launched
at, I think they'd have got a lot of traction. Maybe also fixing VPN so it's
useful for business users.

