back to article Microsoft's earnings down on slow Windows sales, Surface RT bust

Just how off were Microsoft's sales projections for its ARM-powered Surface RT fondleslabs? Try $900m off. That's how much Redmond wrote down in inventory adjustments in its disappointing fourth quarter and fiscal 2013 earnings report on Thursday, which saw the software giant miss analyst estimates by a significant margin. …

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  1. Anonymous Coward
    Coat

    Sniff!

    Kinda' feeling sorry for old Stevie B. What happened to the good old days when you could just lie, cheat, steal and sue your way to a multi-billion dollar international software monopoly? These days you've got to do all kinds of crappy, non-fun stuff like "innovate" and "design" and "compete".

    My coat - it's the one sitting on the back of the chair that I'm about to toss across this room.

    1. Khaptain Silver badge

      Re: Sniff!

      Andy, let me adjust your phrase, just slightly

      These days Steve IS doing all kinds of "unnovating" and "misdesigning" and "incompetence".

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    4. Anonymous Coward
      Anonymous Coward

      Re: Sniff!

      >What happened to the good old days when you could just lie, cheat, steal and sue your way to a multi-billion dollar international software monopoly?

      I wouldn't consider that joyful era over just yet... Wintel's processor division certainly appears to still be hard at it.

      href="http://www.theregister.co.uk/2013/07/12/intel_atom_didnt_beat_arm

      1. Anonymous Coward
        Facepalm

        Re: Sniff!

        @AC 07:27 - "Wintel's processor division certainly appears to still be hard at it. http://www.theregister.co.uk/2013/07/12/intel_atom_didnt_beat_arm"

        You are accusing Intel of running a monopoly in smartphones on the Atom processor? Last I read, they had 1% of the market. That doesn't quite fit my dictionary definition of "monopoly".

        1. Anonymous Coward
          Anonymous Coward

          @Andy

          No. Just observing that they appear to be attempting to achieve one. Perhaps hoping to complete a natty cruet set of matching server cpu monopoly, desktop cpu monopoly and mobile cpu monopoly to grace the boardroom table.

          1. Anonymous Coward
            Holmes

            Re: @Andy

            @AC 13:56 - >"No. Just observing that they appear to be attempting to achieve one. Perhaps hoping to complete a natty cruet set of matching server cpu monopoly, desktop cpu monopoly and mobile cpu monopoly to grace the boardroom table."

            I wouldn't spend much time worrying that a company that's basically at 0% market share of a billion-device market is going to be running a monopoly anytime soon. Not even a big company like Chipzilla is going to be able to make that kind of fast progress in a saturated market.

            If they really wanted a monopoly, they would probably just use that cash hoard and buy the rights to the ARM architecture for themselves.

  2. Stephen Channell
    Facepalm

    Has Redmond lost touch with consumers? YES!

    Windows 8 was shi1e, Windows 8.1 is shi1e... not because the engineers are stupid, or the testers were on holiday.. they are shi1e because the managers wanted to create demand for Windows 9's gesture controls with Kinetic.

    1. Anonymous Coward
      Coat

      Re: Has Redmond lost touch with consumers? YES!

      Hmm, but like a lot of new stuff that Redmond develops, it never works smoothly the first time … in fact, a lot of us have been giving that company one gesture in particular, and it still hasn't worked!

      1. Tom 35

        Re: Has Redmond lost touch with consumers? YES!

        They trying to get us to buy the new stuff they want to sell by pushing the stuff that sells under a bus.

        Want to sell phones? Stuff not-metro on PCs and even servers. When people tell you it's crap, add more colours, animated backgrounds, but don't let them kill the phone interface.

        Want to shift people (who keep skipping upgrades) over to pay for life 365? Cripple the licence for boxed office software.

        1. Eponymous Cowherd

          Re: Has Redmond lost touch with consumers? YES!

          Perhaps they should rename Office 365 to office 420.

          1. Anonymous Coward
            Anonymous Coward

            Re: Has Redmond lost touch with consumers? YES!

            Dear Mrs B, Can RICHTO/Vogon come out to play today? He's missing all the fun.

            1. Daniel B.
              Facepalm

              Re: Has Redmond lost touch with consumers? YES!

              Dear Mrs B, Can RICHTO/Vogon come out to play today? He's missing all the fun.

              Oh, you had to chant the satanic spells and solve the Lament configuration, didn't you? He's come...

          2. Tom 13

            Re: rename Office 365 to office 420

            I think you need to add a character:

            4:20

            Now where is the eyeglasses icon?

            1. Anonymous Coward
              Anonymous Coward

              Re: rename Office 365 to office 420

              I think that's right. 420 = police code for "smoking dope".

  3. asdf

    the worlds luckiest dorm room assignment

    When is Bill G going to finally give up on his old Stanford dorm room mate Steve B and help kick him to the curb? The enterprise side can hold things up for quite some time but asking another 5 years is asking an awful lot.

    1. Mikel
      Thumb Up

      Re: the worlds luckiest dorm room assignment

      Never. SteveB is doing just what BillG wants him to do. The why of it is rather convoluted though. Don't panic: SteveB is scheduled to retire in 2017. Only four more years of this and then we can start complaining about the next MS CEO.

  4. Charles Manning

    Hiding corpses...

    Perhaps the reason for the whole One Microsoft reorganization is to actually bury and obfuscate future numbers. That will make it hard to compare 2013 with 2012 or 2014, giving Ballmer at least some wiggle room for his cock-ups.

    1. veti Silver badge
      Devil

      Re: Hiding corpses...

      OK, this is why Orwell argued that mixed metaphors are so bad. Are you aware of the image you just created, by using the phrases "wiggle room" and "cock-up" in the same sentence?

      Personally, I think the reorganisation is Ballmer's rather sad attempt to evoke Microsoft's glory days by inviting the reader to complete the couplet "... to rule them all, etc." Sadly for him, the comparison of Microsoft to Sauron isn't anything like as compelling now as it was ten years ago.

      1. Antonymous Coward
        Pirate

        Re: Mixed metaphors...

        >OK, this is why Orwell argued that mixed metaphors are so bad. Are you aware of the image you just created, by using the phrases "wiggle room" and "cock-up" in the same sentence?

        Given the subject is Microsoft's business practice, how could it be any more apt?

    2. bazza Silver badge

      Re: Hiding corpses...

      It certainly smells like an attempt to obfuscate the numbers, but it won't work. Shareholders aren't thick, they can add up the numbers themselves to see how the company as a whole has performed and compare that year on year.

      I reckon the PC market downturn is due to Windows 8, not the other way round. People I know are sticking with what they've got rather than 'upgrade' to 8.

      We all know that MS's strategy of putting everything online and grasping control with an app store just isn't working - that's what these figures show. And if it's not working you have to change something. The fact that they're not doing that (call that a Start Menu, 8.1?) smells awfully like someone (Balmer) attempting to keep their pride, which will probably end up costing MS shareholders a load of money.

      Microsoft need to learn that change is something you bring in sloooooowly, and the best thing they could do right now is to give their customers the option of having 8 look and work like just like 7 did. Balmer will get turfed out, and his replacement will do just that and end up looking like a corporate hero. The only reason he hasn't been turfed out is because investors are convinced that 'Cloud' and such like are essential. However I'm convinced that it will turn out to be just another tech bubble.

      There's also the issue with changes in laws. Here in the civilised world data protection regulators are getting increasingly worried about the extent to which Clouds allow companies to exploit an individual's private data. If they pass laws preventing that then the commercial rationale for offering punters Cloudy services vanishes, and so too will the Clouds themselves.

      Oh, and to shift all those unsold Surfaces, they could do worse than opening them up, let us install other OSes on to them. At least that way there would be a reason for someone to buy the dammed things.

  5. Eddy Ito

    Customer vs investor relations

    "55 per cent drop" Clearly this is something from investor relations because customer relations a.k.a. marketing would have said something like "nearly 120% less".

  6. Goat Jam

    So what we have here is a bunch of divisons who operate in competive markets failing, while being propped up by the two divisons where MS still has some sort of monopoly and can therefore charge what they like to keep the cash flow positive.

    They might have "grown" their sales in those areas through shenanigans such as killing off Technet and the like but such growth is temporary and those same shenanigans will probably initiate some negative growth in the short to mid term future.

    Sell your MS shares now I say.

  7. elreg subscriber
    Unhappy

    Crucial missing data

    How much of the revenue comes from "intellectual property" royalties like FAT paid by Google, Samsung, and many other victims of the Microsoft patent extortion?

    1. Anonymous Coward
      Anonymous Coward

      Re: Crucial missing data

      I've said it time and time again. If they don't want to pay the money then don't use FAT32, simple as that.

      It's not like you need FAT32 anyway given most phones and media devices synchronise using MTP now.

      1. Mikel
        Windows

        Re: Crucial missing data

        To avoid the FAT tax you have to leave off the SDHC, which is why Nexus devices don't have that.

  8. Robert E A Harvey
    Pint

    and the followers

    ... and all those companies and corporations whose business model is "Sell whatever Redmond makes" are going to have to start thinking for themselves. Maybe even design their own product.

    Beer, popcorn, deckchair.

    1. Antonymous Coward
      Pint

      Re: and the followers

      So it would appear that nobody wants a device locked onto running a hamstrung derivative of an OS which nobody wants.

      Gosh.

      Hooda thunked.

      Perhaps MS should try putting out a few RTs loaded with Android. Just to test the market. They could even sell them a bit cheaper as they'd no longer have to waste resources pissing about with OSs.

      1. Anonymous Coward
        Anonymous Coward

        Re: and the followers

        "nobody wants a device locked onto running a hamstrung derivative of an OS which nobody wants."

        Android seems to manage remarkably well then considering.....

        1. Anonymous Coward
          Anonymous Coward

          Re: and the followers

          "Android seems to manage remarkably well then considering....."

          How is that pertinent? Do you mean because Android is based on Linux: quite possibly the most successful software project the world has ever seen?

  9. Captain DaFt

    Microsoft Cruises with your Captain, Steve Ballmer.

    Welcome aboard, ladies and Gentlemen, to The Good Ship Microsoft. We regret to inform you that our launch has been delayed while the deck chairs are being re-arranged, But once that's been accomplished, and we can figure out which direction we plan to sail in, the voyage will begin.

    In the meantime, the purser will be passing out Buzzword Bingo cards to you, so feel free to pass the time playing, using this memo that I, with some pride, have crafted for your enjoyment.

    Again, my sincere apologies or the delay, but I assure you that eventually, we'll be enjoying tropical breezes... or stunning glacial views... or maybe even the delights of the Mediterranean... or Caribbean... or Gobi... Somewhere exciting, I assure you!

    [Note: I originally intended to post the infamous Ballmer Memo here, But El Reg's website screamed and cried so piteously, that I took mercy, and settled for a link:]

    Link to Dottech.org's ballmer_microsoft_bloatware gif

  10. Trevor_Pott Gold badge

    "Has redmond lost touch wIth consumers?"

    I had a momentary urge to type out the full solution set to the issues at hand but thankfully, I overcame it. I charge for that now; a reasonable amount, in fact. That, and Microsoft isn't going to read the comments to anything on El Reg so why bother wasting the time? Instead, I believe a song is far more appropriate:

    The roof the roof the roof is on fire/The roof the roof the roof is on fire/We don't need no water let the motherfucker burn/ Burn motherfucker burn.

    If Microsoft's relevance within my sphere of practice is going to come to a miserable grinding end that seems likely to do a fair amount of economic harm to me and mine...then I might as well take whatever minor, petty pleasures I can from watching it all go down. After all, I'll see no tangible benefits except the pleasure I get from roasting marshmallows on their mouldering corpse.

  11. earplugs

    MSFT down 6% after hours

    FXXK OFF BALLMER!!

    1. TheVogon

      Re: MSFT down 6% after hours

      But still up 25% in the last year...

    2. Daniel B.
      Trollface

      Re: MSFT down 6% after hours

      Now this is one company I'd like to see Icahn bring his claws into...

    3. Mikel

      Re: MSFT down 6% after hours

      Finished at -12%. Companies this big aren't supposed to move that fast. The volatility is going to hurt their credit rating.

  12. Anonymous Coward
    Anonymous Coward

    Surface RT is a decent product at the wrong price point. Launched at $300 including touch cover they could have had a good product on their hands, even if a loss leader.

    The vastly more useful Pro, and Atom tablets rendered it obsolete before it hit the market.

    That said, I'd pick one up for $200 ish if there's a firesale

    1. Killraven

      I might buy a Surface RT for $100, and I'm certain that I'd buy a Surface for $200. But I don't have much use for such devices. My wife recently got an iPad mini for school use and the only time I touch it is once or twice a month to take pictures of stuff to put on eBay. At least with the non-RT Surface I could play some old games. Original Civilisation and Sim City would be fun to have portable.

      1. Jonathan 29

        Sorry for being a cretin, but you can download Sim City and Civilisation from the app store if you wanted to.

    2. Anonymous Coward
      Anonymous Coward

      Launch at the right price, sell loads, have momentum.

      Launch at the wrong price, sell a few, lose momentum, discount price, sell a few more, lose faith.

      Price is everything.

    3. Mikel
      Gimp

      OEM partners were already having kittens

      Microsoft, at the 11th hour, announced they were going to compete with their hardware partners and float a Win8RT tablet. Can you imagine the caterwauling that would have ensued if they did so at a $300 price point, including the keyboard?

      /icon represents OEM partners.

  13. N2 Silver badge

    seems like

    They just cant produce anything that customers or businesses really need.

    1. Dan 55 Silver badge
      Devil

      Re: seems like

      Well they can produce things that businesses need, the Server and Tools division and the Business division were both up. However monkey boy's busy making them cloudy since he wants MS to be more like Apple and Google, he hasn't realized that those areas are areas that MS excels in just because it's not like Apple and Google.

    2. Anonymous Coward
      Anonymous Coward

      Re: seems like

      SQL Server? seems pretty popular to me. It's just a shame they are ripping public services off with the new licence model.

  14. Zola
    Unhappy

    Firesale or Landfill?

    I doubt Microsoft will want to suffer the ignominy of an RT firesale, but hopefully there's a law that prevents Microsoft turning perfectly functional devices (OS excepted) into landfill which is where I'm sure they will now be headed.

    I'd buy one for $100 if I could put another OS on there...

    1. Anonymous Coward
      Anonymous Coward

      Re: Firesale or Landfill?

      It could have been an interesting and potentially useful device "if I could put another OS on there"... they might have even sold a few! I don't think selling hardware was ever really the point though... more an exercise in demonstrating to OEMs the wonders that embracing Win8/RT would do to their balance sheets... Something of a success then really, I suppose.

      1. Richard Plinston

        Re: Firesale or Landfill?

        > more an exercise in demonstrating to OEMs the wonders that embracing Win8/RT would do

        WindowsOnARM, now RT, seemed to me to be more of demonstrating to OEMs that using other OSes on ARM would lose them their 'loyalty' discount of _all_ products. It worked for HP and WebOS, it probably held back progress for yet another year (after MS has managed to halt progress for a quarter century).

        Now it has demonstrated to the OEMs that alternate OSes are the way forward.

    2. Mikel

      Secure Boot

      Secure Boot is mandatory to be present, enabled and not defeatable by the end user on Windows RT devices including Microsoft Surface RT. This prevents these 6 million unsold devices from being made useful.

      It's a Transformer Prime otherwise. You can buy refurbs of that on Amazon for $239.

  15. LeftAlready

    Developers, developers, developers...

    As a developer I was excited about the prospects for Windows tablets. I invested in Windows 8 (it's not too bad), and worked on some apps. Then the hardware was delivered. Too expensive and too slow. What a waste... We used to be excited by Microsoft's plans, now, I regret, we struggle to believe them.

    Going forward, Microsoft will not only have to regain the technology lead it once had but also regain the confidence of the market (and its developers). IMHO, the first will be easier than the second; perhaps the train has already left the station?

    1. tony2heads
      Linux

      struggle to believe them

      Give up the struggle and come over to the Dark Side

      https://lkml.org/lkml/2013/7/15/374

      1. Anonymous Coward
        Anonymous Coward

        Re: struggle to believe them

        Give up the struggle and come over to the Dark Side

        ...apparently cookies and brownies await you there for your enjoyment. (I presume they mean biscuits and fudgey-cakey-goo-stuff rather than little girls playing in the woods...)

  16. DrXym Silver badge

    Microsoft really screwed up on Surface

    I think Windows on a tablet is a compelling experience that offers the best of both worlds. There are an ever increasing number of tablet / hybrids which demonstrate that given the right cpu (e.g. Haswell or Atom processor) and form factor that Windows works. Sadly for Microsoft the Surface range isn't amongst them.

    Surface RT - runs a gimped OS which is neither fish nor foul and has crap performance

    Surface Pro - runs proper Windows on i5 but runs hotter than the surface of the sun and is not so much a tablet as a slab.

    Both suffer from being very expensive

    Both suffer from having a stupid kickstand which doesn't bear comparison to stiff hinge alternatives

  17. Sirius Lee

    So this article is based on the premise that the august body that is 'Yahoo! Finance' has any clue about what Microsoft should be earning. I'd like that they were earn 100Bn but my preferences don't count. Their numbers were up at a time when they've launched a slew of product in the face of an astoundingly hostile press and their revenue are up. Just not as much as some lard arse in an office someplace wanted to make up. Oh, and that august institution is part of a company headed by a person who used to work for a company that used to see Microsoft as enemy number one (I imagine that title has passed to Samsung now). No scope for bias there then.

  18. Robert Sneddon

    No change

    The numbers MS released yesterday aren't much different to the previous quarter and year, up a bit if anything, and until the revenue and earnings figures go seriously and consistently down then Steve's job is safe.

    Financial analysts are not much better than the woad-covered druids who haruspexed chickens to figure out who was going to win the next big fight the tribe was getting set for.

  19. Mark Goodson

    Has Redmond lost touch with consumers? : What touch with consumers?

    As has been ppinted out, all you need to know is in the numbers. Microsoft has succeeded by ruthlessly exploiting it's Windows/OS monopoly. Where they can still do this, in the corporate drone market, they are doing well. In the consumer market where there's a huge swathe of Android products and iOS they are floundering.

    Microsoft is renowned for take 3 goes to finally come up with something competitive. Because of their market muscle with Windows they had the time to do that. Nowadays they don't have that luxury.

  20. Anonymous Coward
    Anonymous Coward

    From the company that brought you

    plays for sure, zune, ms-dos 4, windows ME, the secure internet experience that was ie6, activex and Vista

    Botched OS upgrade and junk hardware product. What is new?

    Despite all that, they keep staggering on. How does that happen? That's the story

  21. Potemkine Silver badge

    Suicidal tendencies

    Despite all his efforts, Mr. Ballmer wasn't able to kill MS yet... I've no doubt he will continue trying in the next years.

  22. Anonymous Coward
    Anonymous Coward

    Here's a hint for Microsoft to improve bottom line :

    Charge NSA for direct access to Outlook and Skype. Diversify this by offering access to Exchange servers inside corporate networks and installing key loggers on desktop and laptop PCs.

  23. Anonymous Coward
    Anonymous Coward

    What can I say, people are unreasonable. They don't want spying on.

    It's microsoft "turn your customers into a product" at its very worst.

    Ballmer! It's the Econo UI stupid!

  24. goats in pajamas

    Never give a monkey...

    ...the keys to the banana plantation.

    The end result is always 'no bananas'.

  25. Tom 13

    Stevie seems to have forgotten some sage advice from a cartoon:

    Remember: Captain Scarlet is indestructible. YOU are not.

  26. Will Godfrey Silver badge
    Pint

    This makes me so sad I think I need another beer - it is Friday after all.

  27. John-IT-Guru

    MicroKlunk aka The Devil in Redmond is getting what's due

    When you steal lie and cheat you lose!

    Payback hurts like _ell doesn't it Stevie Weenie balmer?

  28. Anonymous Coward
    Anonymous Coward

    I told you Surface tablets were going to flop

    Only the most deluded Microsoft fanboys and shills couldn't see it coming.

    And Surface Pro isn't going to do much better. It already lost to competing Windows tablets/hybrids on price and features. And if those Win8 devices are not selling well... what hope is there for Surface Pro?

    Next thing to flop: Windows phones. It's the domino effect. Or should I say Metro tile effect?

    P.S: No reorg at Microsoft is going to work unless Ballmer first removes himself as CEO. Rearranging deck chairs won't save the Titanic from sinking.

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