Microsoft Overestimated Surface Demand, Say CEO Ballmer
Microsoft Overestimated Surface Demand, Say CEO Ballmer by UCStrategies Staff
Microsoft CEO Steve Ballmer has acknowledged that the company overestimated demand for its Surface tablets, and manufactured too many of them. Ballmer said: “We built a few more devices than we could sell.”
The pricing for Surface RT was cut by 30 percent in early July, and recently the company announced a $900 million charge in its Q4 earnings, which reflected the price cut.
The founder and CEO of Redmond, Washington-based Microsoft partner Denali Advanced Integration, Majdi Daher, noted that Microsoft missed the mark when trying to emulate Apple’s lead by selling Surface tablets only through retail.
However, Apple did only sell 14.6 million iPads in the quarter, which is lower than Wall Street’s expectation that it would sell 18 million.
Apple’s slowdown, and Google’s inability to make an impact on the enterprise and commercial tablet markets means that Microsoft still has the some opportunity with its Surface tablets.
Daher said: “Microsoft is well positioned to gain significant share in that space, but only if they create a partner program that enables companies like us to take that strategy to the enterprise and commercial space.”
The president of Manalapan, New Jersey-based Microsoft partner Silicon East, Marc Harrison, stated: “The overriding problem with Surface was that no one wanted Windows RT, as it can't run the millions of existing Windows apps.”
Microsoft has begun testing new Surface devices with key enhancements, according to Ballmer, and The Verge has commented that the new tablets run with Qualcomm's new Snapdragon 800 processor.
The distribution strategy employed by Microsoft certainly affected the sale of Surface tablets; whereas they initially only sold through retail, last month Microsoft began selling its tablets via 10 large account resellers in the U.S.
Surface still cannot be sold by Microsoft’s broader channel, but Kevin Turner, the Microsoft COO, commented that partners are able to bring customers to Microsoft retail stores to look at their products and devices.
Ballmer also acknowledged that Windows was not doing as well as Microsoft would like, according to Neowin, the company’s blog. There was a 5 percent decline year-over-year of Windows client division revenue in Q4, which follows the pattern from the last few quarters; this, Microsoft states, is due to poor consumer PC sales.
Microsoft CFO, Amy Hood, said that with Windows 8, the company is “working to transition this business into the modern era.” (CY) Link