Microsoft's Surface revenue so far revealed: $853m

Microsoft's Surface revenue so far revealed: $853m

Summary: Microsoft reveals its first sales figures for its slow-moving and now discounted Surface line.

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Microsoft has generated $853m from its Surface lineup since first releasing the product line eight months ago, according to its Form 10-K filed with the Securities and Exchanges Commission.

The revenues cover the period to June 30 from the Surface RT's release in October last year, including the months after the launch of the Surface Pro in February.

While report does not shed light on Surface shipments to date, analyst firm IDC has estimated Microsoft shipped 900,000 Surface RT and Pro devices in the first quarter of 2013.

Earlier this month, Microsoft revealed a $900m writedown due to an Surface RT "inventory adjustment", which made up a large chunk of the $1.6bn increase in product costs associated with the Surface and Windows 8. The writedown also coincided with new discounts on its Surface RT that brought its 32GB ARM-based tablet down to $350 in the US. 

Revenues from Surface were a shade under five percent of the $19.2bn Microsoft's Windows division earned for financial 2013.

Launching the Surface alongside its new operating system has been an expensive exercise for Microsoft: the Surface RT inventory writedown made up half of the $1.8bn cost of revenues for its Windows division in 2013. The division's sales and marketing expenses rose $1bn or 34 percent for the year, largely driven by the $898m increase in Windows 8 and Surface advertising costs, according to Microsoft.  

Higher costs also saw Microsoft's Windows division operating profit fall 18 percent year on year to $9.5bn.

Microsoft also reported for its entertainment and devices division that Windows Phone revenue increased $1.2bn year on year, but how much comes from OEMs like Nokia, which dominates Windows Phone device sales, is unclear since the figure also includes Microsoft's Android patent licensing that covers most OEMs.

Topics: Microsoft Surface, Hardware, Microsoft, Tablets

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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71 comments
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  • And Advertising Cost: $1000 Per Unit Sold

    No wonder the OEMs found the whole prospect too rich for their blood...
    ldo17
    • Did that figure

      suddenly pop into your head from nowhere. There would be plenty of room.
      Blogsworth
      • It could be close to the true - but probably a bit exagerated

        "
        According to Paul Thurrott, Microsoft’s advertising campaign for Surface draws upon a considerable proportion of $1.5 billion total budget; he puts forward a figure of $400 million
        "
        AleMartin
      • LOL!

        That made me chuckle!
        William Farrel
    • Advertising cost for mostly Windows, not Surface.

      The vast majority of advertising was for Windows 8, not Surface.
      P. Douglas
      • How so?

        Never seen a single Windows 8 advertisement, plenty of Surface dancing though...
        danbi
        • Windows 8 ad example

          Go to the following web site, and look in the upper right hand corner of the content space. If you don't see a Windows 8 ad immediately, hit the refresh button until you do.

          http://www.neowin.net/
          P. Douglas
          • Re: Windows 8 ad example

            Are you joking?

            This stuff costs billions?
            danbi
      • Devil wil Smile

        Don't mind these oxymoron. The slaughtered the product every freaken time and when people didn't storm to buy it they are still complaining. Now they shift to revenue. They really think they can kill Surface RT?!!
        jonnybr
    • I see you still make up stuff as you go along.

      I guess it's the best way to hide your disappointment in the second rate hardware you champion.
      William Farrel
      • Second Rate?

        First rate.
        Have had my Pro for just over a month now and will say I am very pleased with it. If we get the 256gb version in the US I will likely get it and gift this. Keep in mind I bought the Pro after a few months of really looking at alternatives for my needs (I am coming from an ASUS UL). It is a fantastic device.

        Note: my current main use tablet is an Android device.
        rhonin
        • Telling you the fact

          Let me time this for real, I bought Surface RT cause I don't want full fledge Windows 8 on tablet. I want to use my tablet more than watching movie or tapping on screen pretending to play games. I got smartphone, which got my useful apps, so, my tablet as to do better than my smartphone, not just a bigger screen version of it. I love my new Surface because it fit perfectly for me. I have shown it to more than 10 people, they all love to have it. This beg the question, why these bloggers like slaughtering it? I hope there is no kind of bribery going on.
          jonnybr
    • Statutory Warning - Smoking is injurious to health

      and so is using Android or any Linux crapware. It dumbs people down like you just displayed.
      Shank104
  • Are you still an Apple hater?

    Now that we have seen the sale figure, the billion MS spent on promoting Win 8, RT and Pro, and those awful ads, are you Apple haters/idiots still a hater?

    The market has voted with their wallets on the RT and Pro and they suck. The moment I picked up the Pro in my hands in Best Buy, I knew it is dead. It was heavy, extremely hot to touch and horribly designed.

    No one will be able to compete with Apple in design. Just look at the iPhone, iPad, iPod, Mac Book Air, Mac Book Pro Retina.
    Plogpower
    • ASUS no longer making RT devices

      Apparently, ASUS announced that it will no longer make RT devices.
      Wakemewhentrollsgone
    • But...

      Mac Book Air, Mac Book Pro Retina don't sell anywhere near as much as other windows PC's do, so you're saying they Apple PC's suck?

      I think that's a bit harsh; they fill a niche and from what I've heard the user base really likes them.

      Much the same as the Surface really.
      Pachanga-4184c
  • Shareholders should be concerned

    About whether Microsoft wants to be in the low margin commodity computer hardware business. When you factor in the write down of the existing inventory, the advertising costs, and development costs likely in the billions, Microsoft has surely taken a huge bath on this.

    The Bill Gates run Microsoft got this, and left the hardware to OEMs better equipped to take spec risks. The Ballmer run Microsoft takes much bigger risks, to be sure, but that doesn't always make for a good thing.
    Mac_PC_FenceSitter
    • Gates was mostly a figurehead, and the people who made Microsoft so big,

      were people like Ballmer.

      Gate's leadership at Microsoft was way overrated. Gates was mostly a developer, and needed people with management experience to get the company off the ground. Gates might have been the developer of the initial software which created Microsoft, but most of what occurred after that was as a result of people who knew how to run a company and whose visions were more than just an OS and a computer language. As an inspiration for the company, Gates was "okay", but not the leader that so many mistake him to have been. When Gates left, the company actually grew to develop a lot more products and services, and it's not the leader in tech, all things considered.
      adornoe@...
      • Gates was (is) a visionary

        Ballmer is just a salesman.

        In my opinion.
        Smalahove
        • Gates was a coder/developer, and no visionary at all.

          He was rescued by people who knew how to run a business. Gates is not business savvy at all. If the business people had not taken over, he'd still be a developer (not that there's anything wrong with that).
          adornoe@...