Unsold surface tablets cost Microsoft nearly $1 billion

It's official: Microsoft's first major attempt to outdo Apple's iPad in terms of fit and finish, and Android's operating system in the way of apps and usability, has fallen flat with consumers. The company's quarterly earnings report, released on Thursday evening, revealed a $900 million inventory write-down, due mostly to unsold inventory of Surface tablets.

According to officials, the brunt of the loss was related to the Surface RT, the first version of the Surface tablet presented to the public late last year. Dinged by poor early reviews, the Surface RT languished on store shelves as many of the Windows faithful held out for the pricier Surface Pro, a more robust version of the tablet that allows the use of desktop applications. However, when the Pro version finally arrived in February of this year, the initial excitement around Microsoft's foray into the tablet space had waned significantly.

Complaints about the Surface RT mostly revolved around the device's limited software availability, sluggish performance, odd choice of 16:9 aspect ratio (making using the device in portrait mode somewhat unwieldy), and the Metro interface of Microsoft's Windows 8, an experience that takes some getting used to, particularly for long-time Windows users.

In an interview with Reuters, Pacific Crest Securities analyst Brendan Barnicle called the tablet failure, "the biggest miss we've ever seen from Microsoft, the biggest that I could remember." Commenting on the news of the company's major tablet misfire, Microsoft CFO Amy Hood said, "we do know we have to do better, particular in mobile devices."

While those sentiments at least indicate that the company has a firm grip on the reality of the situation, this major tablet fail will likely impact the Microsoft's efforts for at least the next year or so as it attempts to reset and re-attack the increasingly competitive tablet marketplace.

Via Microsoft

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