Surface RT sets the new gold standard in hubris

Surface RT sets the new gold standard in hubris

Summary: Six million unsold Surface RT tablets? Something went wrong there. Perhaps Microsoft was a little, uh, over-confident...

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TOPICS: Windows 8
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Is it really true that Microsoft is sitting on six million unused, unsold Surface RT devices?

It looks like it. Yesterday during its regular earnings call, the company announced a surprise $900 million write-down related to an "inventory adjustment" of Surface RT units, parts, and accessories. You might as well call that a round billion dollars.

That's a lot of Surface RTs. It's way, way more than I'd speculated that they'd made. My guess was that they'd probably gone out there and made a million of the things initially.

Believing that you can clear such a vast stock of that many units of a new, untested product, that's more to the point your first foray into making hardware takes you way past optimistic, way past confidence, and whilst you're barely slowing down through arrogance to smack head first into hubris.

Competition

Surface RT only ever had one thing to compete against. Namely, the iPad.

The reason why I was so disappointed with my Surface RT was that it wasn't a better product than the iPad.

I believe in a market of healthy competition, customer choice. I spent the whole of the second part of last year totally convinced that Sinofsky and Co were going to finally create something that gave the iPad a run for its money. I think the iPad is a fantastic device, but -- honestly -- if someone gave me something better, I'm not proud. I'd switch in a heartbeat.

In this chart prepared by my ZDNet colleague Adi Kingsley-Hughes, we can see iPad sales over time.

24-01-2013-09-47-49-455x544
iPad sales over time...

What those numbers show, when compared against an initial order of, say, seven million Surface RT's is that Microsoft seemed to have this total self-belief that from nowhere they could sell iPad like numbers. Right off the bat.

The company's behaviour looks very much like they felt the iPad to be a soft target. Almost as if they were saying, "why are people buying these rubbish iPads? Windows is much better! Our OEMs tend to build rubbish kit though... Aha, we'll do it ourselves! And our customers can haz Office!"

Here's my interpretation of The Microsoft guide to competing with the iPad:

  • Step 1: Put some effort into industrial design.
  • Step 2: Slap Windows and Office on whatever you've designed.
  • Step 3: Ignore anything you can learn from Apple and their customers.
  • Step 4: Order seven million units.
  • Step 5: Profit!

Two things there. Firstly, the iPad was introduced into a virgin world that was ready to accept a new way of "doing computing". Coming out against strong competition is different to coming out to nothing. (Note how Google essentially just copied the iPad. Android tablets are now actually good.)

Secondly, the iPad was straight out-of-the-gate a perfectly put together consumer proposition. It was both immensely simple, and polished. No one turns on an iPad for the first time and is lost. It's slick, simple, and accessible, and it always has been.

Problems

The reason why I refer to the mistakes Microsoft made with Surface RT as "a new gold standard in hubris" is because it appears to totally, totally misunderstand what the iPad actually does for people and almost shows a lack of respect for the thinking that Apple's engineers put into the product.

The iPad works because it scratches an itch that people had. People like social networking services. People like getting information from the internet. People like being able to pick and choose when they watch TV. The iPad let's people do that more conveniently, and in a way where the technology they have to deal with recedes into the background because it's simpler, more polished, better packaged.

What Microsoft's engineers saw when they looked at the iPad was a chassis and an ARM processor. They seemed to think that all they had to do was just ram Windows onto it and everything would be fine.

And along with Windows came all the complexity. Plus, they managed to make the proposition of Windows more complex by breaking backwards compatibility with x86 software.

That problem with complexity was exacerbated by the fact the product was classic v1.0 Microsoft fayre. Microsoft's systems and processes are designed to create a good v3.0 product. Which is fine if people will bear with you, which in Consumerland they typically won't for the simple reason that most people don't care that much. They just want what they've spent their money on to work well first time.

Conclusion

This piece is not just me having a schadenfreude moment -- unless every single employee at Microsoft manages to understand why the iPad works for normal people, and why fast followers like Google, Samsung, and Amazon also do -- give it ten years and Microsoft will be just like IBM is today.

So please, if you happen to work at Microsoft, please try and get your head around why people like the iPad?

Surface RT deserved to sell as it did. It was a poorly executed product that misjudged the market spectacularly.

Hubris, thy name is Ballmer. Or Sinofsky. Although one of those two is slightly easier to blame at this point.

What do you think? Post a comment, or talk to me on Twitter: @mbrit.

Topic: Windows 8

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147 comments
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  • ok then...

    you still haven't provided a single reason for which you can't do with a surface the same things you do with an ipad...i really can't get any difference apart from a different UI that you can like or not.

    The only reason is price: surface was overly priced...as the ipad IS but you can't pretend to enter a new market with premium price without first proving that your proposition is a worthy one (that is unless your brand is uberly "cool" but that's not the case for MS).
    it's really simple as that but probably MS couldn't set a more aggressive price beacuse they wanted OEMs to jump onboard.
    Spectrum7glr
    • yep

      Well actually two things...

      Price is certainly one of them.

      The other are poor reviews from guys like CP at LockerGnome. He would never revisit it after updates either.
      slickjim
      • OEMs

        And why did MS overprice the Surface Tablet? Because they had to keep every single OEM from revolting. And what happened? The OEMs by and large didn't deliver on these first generation devices. Question: What vendor delivered be a nice 10-11" Windows 8 tablet that let's me dock the tablet into a nice cradle which is then plugged into my large monitor, keyboard, mouse, etc? NONE! Why? They fear it would cannibalize their desktop PC sales, which they're too stupid to understand that only gamers and businesses really need. Yet this is what most consumers would want in addition to a nice detachable keyboard.

        Certainly, MS should have already reduced the OEM licensing fee down like they're in doing now. And last, they shouldn't have included the desktop and Office. Rather they should have simply said, "look we've got a Modern UI version that's in the works." All of these simple steps would have allowed them to sell the base 32 GBs Surface RT device for $399.

        Now if there's one area of hubris with these things it would be the outrageously overpriced touch and type pads. At least the touch pad should have been sold for $50 in order to spur adoption.
        jjworleyeoe
        • "And why did MS overprice the Surface Tablet?"

          Because they were trying to do what only Apple can do by trying to make 30-40% on each device sold.
          Wakemewhentrollsgone
      • No one wants to reward Microsoft for abandoning x86 Windows

        Everyone realized that Microsoft wanted to abandon x86 Windows for a non-compatible operating system. Everybody realized that Microsoft wanted to sell all their applications to us all over again. We all realized that Microsoft was trying to pull a fast one on us and sell us software which we already own but this time for RT, a totally incompatible operating system to x86 Windows. Everybody knows what a money grubbing whore Microsoft is. Mankind needs not to reward a company that is trying to pull a sleazy move on us and we know Microsoft too well to let them get away with this scam.
        tjordanchat
        • Don't get too comfortable with Windows. Microsoft plans to dump it!

          Is is plain and obvious that Microsoft has no plans on maintaining x86 Windows. Microsoft wants to sell us the same old software but this time, all over again so that we don't own anything new but we do have to give money to Microsoft which we already gave them. Microsoft can not be trusted to do the right thing for their customers. Microsoft only looks at how to get more money for their customers.
          tjordanchat
          • Seems just like what Apple does

            And no one really seems to care. I don't see why it seems to be an MS only issue.
            Stuart Becktell
          • Re: Seems just like what Apple does

            How does Apple do it?

            By claiming OS X and iOS run the same applications?
            No, they don't. Even although OS X and iOS are technically the same OS (Darwin/XNU).

            Also, with Apple -- once you buy an application from their App Store, you are licensed to use that app on all your Apple computers. Or the app from the iOS store, on all your iOS devices.

            In addition, most of the applications in the App Store are cheaper than elsewhere, even if it is exactly the same application and even if "bad" Apple gets 30% of the price. Example at hand - AutoCAD LT:
            From AutoDesk, it costs $1200 for ONE computer.
            From Apple's App Store, it costs $899, for ALL your computers.

            Go figure...
            danbi
          • Slap happy

            Step 1: Put some effort into industrial design.

            What effort? That's a joke, right?

            Step 2: Slap Windows and Office on whatever you've designed.

            Slap a desktop GUI on to a tablet and you have a sucker's punch. Reminds of those weak-assed XP tablets from years back.

            Step 3: Ignore anything you can learn from Apple and their customers.

            Actually I think they're trying to clone Apple and failing miserably with Surface RT. Dumbed-down desktop on a tablet does not a computer make.

            Step 4: Order seven million units.

            Yes, our runaway success! (Watch them recycled into landfill.)

            Step 5: Profit!

            Greed! Greed is good! Gordon Gekko taught them so.
            CaviarRed
          • "Yes, our runaway success! (Watch them recycled into landfill.)"

            More likely these will be sold for $99 in a run-out sale - just like HP TouchPads.
            Wakemewhentrollsgone
          • I predict ebay

            At $59.95
            CaviarRed
          • That's a JOKE! Like ZDNet forums

            Look how ZDNet is "allegedly" a "tech company" and yet they STILL DO THESE FORUMS *BACKWARDS*! i.e., "oldest posting first - even YAHOO for heaven's sake, allows the USER to choose the order of comments; but, failing that, NEWEST POST FIRST is preferred order! I would wager NOBODY cares to see (and scroll through droves of) OLD comments - we want to see 'MOST RECENT COMMENTS FIRST.' TAKE A VOTE ZDNet! I dare you! Geesh!
            So... the $59.95 is a JOKE - that is WAY OVER-PRICED! $39.95 is my bet.
            bitdoctor
          • Can't/Shouldn't go to landfill...

            Too many hazardous materials used in its construction.
            jessepollard
      • Re: Reviewers are the culprits!

        Microsoft didn't pay them enough, apparently -- to write overly positive reviews. That must be it! ;-)

        Trust me, if reviews were all positive, things would have been much more disastrous for Microsoft. Consumers would be in droves returning the Surface RT and yelling all around Internet what junk it is.
        danbi
        • If it works for politicians...

          ...maybe it will work for MS as well.
          John L. Ries
        • Absolute nonsense!

          Even "straight down the middle" reviewers, such as Mary J Foley, have been critical of the Surface RT.

          But putting that aside, it is not hard to find very positive reviews of the product - here on ZDNet and elsewhere. To try to blame reviewers for the failure of Surface is childish nonsense.
          Wakemewhentrollsgone
        • Umm... they already are

          Did you MISS the news? Consumers already HAVE returned Surface RT in droves! And the social media / word-of-mouth got out: "DON'T BUY RT, IT'S A SHAM - WAIT FOR PRO!" And really only techs like us would buy the Pro for the most part. Speaking of marketing and advertising (LOL), I have only seen ONE of those "snappy snap-on keyboard Surface" ads in the longest time - they used to be on 15 to 20 times per day.

          Now, they haven't been returning in AS MANY droves as if it had sold more, but still.
          bitdoctor
      • LOL!

        You actually think Chris Pirillo has any credibility? He's a well known Microsoft hater and Apple fanboy.
        jhammackHTH
    • Microsoft had the ultimate thing, and squandered it

      Price, and compatibility. All things being equal, even if the Surface was just as good as an iPad, and in some ways it may be, it has nothing that puts it above an iPad. No single hook that made people want to have it.

      In fact the WindowsRT OS is more complex than iOS on the iPad due to the crazy ways you get into some settings, and that it tends to favor a landscape view rather than portrait that many people use while reading etc... I think that Android and iOS both do a much better job of switching between a portrait and landscape environment. Then you have the mishmash of ways to change settings on the thing, and the desktop mode that you can look at, even run Office for RT in, but nothing else. That just smacks of ineptitude. Why force everyone to use Modern Apps from the store, but allow Office to be a desktop app?

      WindowsRT is a dyslexic beast that just doesn't know where it's going.
      trumanp@...