Microsoft's Surface Is a Financial Failure With Just $853M in Revenue

Story by

Josh Ong

Josh Ong is the US Editor at The Next Web. He previously worked as TNW's China Editor and LA Reporter. Follow him on Twitter or email him a (show all) Josh Ong is the US Editor at The Next Web. He previously worked as TNW's China Editor and LA Reporter. Follow him on Twitter or email him at [email protected].

We knew the trouble with Microsoft’s Surface project was more than skin-deep earlier this month when the company took a $900 million write-down for excess Surface inventory in its fiscal fourth quarter, but Microsoft just revealed in its 2013 10-K SEC filing (via The Verge) that the project’s revenue for the year reached just $853 million.

Put another way, Microsoft’s inventory adjustment was larger than the sum total of all Surface sales. That’s an expensive failure, especially considering the additional marketing costs that went into promoting the Surface. Microsoft attributed an $898 million increase in advertising costs with Windows 8 and Surface efforts. The firm didn’t reveal what the split was between the two, but all those dancers and graffiti artists must have added up.

As we noted earlier this month, the Surface RT is on life support, and Microsoft’s 10-K filing has provided the numbers. The Surface failed to hit the $1 billion mark as previously believed. Microsoft is known to use the billion dollar figure to validate successful business units worth keeping around.

Brand recognition for the Surface has been largely successful, as Microsoft has made waves with the device, but those waves unfortunately failed to translate into sales. The company has already slashed prices, but now it has the difficult decision whether to give the division another shot or simply cut its losses and reconcile with its OEMs.