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Microsoft losing money over Surface tablet

The Microsoft Surface tablet has not been the big money maker that Microsoft had hoped. The device has earned the company less in revenue than it paid to write down unsold stocks.

The company have said in their regulatory filing with the U.S. Securities and Exchange Commission that the Surface tablet had gathered a revenue of $853 million in the fiscal year ending June 30th. They have not disclosed how many units they have shipped in the last year.

Microsoft said earlier this month that they have taken a hit for Surface RT inventory, losing around $900 million. They have also paid out an increase of $898 million in advertising costs focusing on Windows 8 and the Surface tablet range, according to the filing.

Microsoft CEO Steve Ballmer: 'Please buy our Surface tablet'
Microsoft CEO Steve Ballmer: ‘Please buy our Surface tablet’

The Surface RT tablet was released last October and has been a slow seller for the company, especially as people realise that applications which work on Windows 7/8 desktop need to be converted over to support the ARM based processor inside the tablet. They also received a lot of negative press from tablet hardware partners who were expecting Microsoft to work as a software supplier, rather than build it themselves and enter into the hardware market as a competitor.

According to the best reports, Microsoft have shipped around 900,000 Surface tablets in the first quarter of the year, giving them a 1.8 percent market share in the tablet sector. IDC confirm the data and say that Apple led the way with 19.5 million iPad shipments relating to a market share around 40 percent. Samsung have around 18 percent market share with Asus at 5.5 percent and Amazon at 3.7 percent share.

IDC added that Windows 8 and Windows RT shipments across ‘all vendors’ hit 1.8 million units. Microsoft are not to be disheartened however, saying that would continue to invest in the Surface tablet.

Kitguru says: Smaller companies would already have moved on and marked this down as a loss, but Microsoft have a lot of reserve cash to keep investing.

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