The Surface RT numbers are in, and they are absolutely brutal. We’re talking Blackberry Playbook numbers. HP Touchpad numbers. We’re talking Kin part 2 numbers. This is the Edsel of tablets.
Initial reports from Microsoft indicated that they were planning on a shipment of 3-5 million Surface RT tablets over the holiday season (depending, presumably, on sales). Sometime in December, it was reported that Microsoft had slashed their order in half. Then Microsoft proclaimed that they upped their order in preparation for a frenzied retail store launch.
That frenzy never materialized. IDC reports that under 900K units have shipped so far. Mind you, that’s shipped to retail — the actual amount sold has been estimated by some to be as low as 250K. That makes sense — if they shipped 900K and sold them all, they would ship more. If they even sold 500K they would still order more. The fact that they’ve shipped 900K and stopped shipping or making any more units indicates that the lion’s share of inventory remains unsold. 250K? I believe it. And that number probably includes all of the Surface RT tablets Microsoft gave away to every single full time MS employee over the holidays.
But here’s the brutal part — Microsoft spent $400 million marketing Surface RT. That was spent on TV commercials, magazine ads, events, and multiple temporary Microsoft stores set up to show off Surface RT. Let’s say the 250K sold is low. Let’s say it’s more like 400K. That means Microsoft spent $1,000 in marketing per Surface RT sold. That’s not including R&D, manufacturing costs, and any other overhead. Just for marketing. $1,000 for each tablet, or twice the MSRP of $499. If it is indeed just 250K sold, that’s $1,600 spent for each Surface RT. Just for marketing.
You would think at some point Microsoft will cut their losses like they did with the ill-fated Kin. But they’ve poured so many resources into this failed platform, and without a plan B, it looks like they’ll keep up this charade for another year. Another long, brutal year.