Last week we found out that Microsoft had to eat $900 million because it hadn’t sold enough Surface tablets. While it would be easy to chalk it up simply to a lack of desire on the part of the consumer—as well as Microsoft’s inability to adequately differentiate the Surface from its rivals the iPad or Android tablets—it turns out that the culprit may be even more simple than all that. According to Microsoft CEO Steve Ballmer, the company just made too damn many.

According to a post on the Verge today, Ballmer sat down for an internal town hall meeting for Microsoft’s employees, and was joined by COO Kevin Turner in talking about the current state of the company. There, he said, “We built a few more devices than we could sell.”

While the fact that Ballmer admitted to Microsoft having made the mistake in the first place is newsworthy in and of itself, what’s even more impressive is how understated that admission is.

“A few”? You lost $900 million on it! That’s at least “a lot” or “plenty” or maybe even “a buttload.” But then, maybe this is why I’m not a CEO.


Anyway, at the event, Ballmer also confirmed that there were internal tests going on within the company on a new version of the Surface, which will reportedly be outfitted with the new Qualcomm Snapdragon 800 processor, which ought to improve the device’s speed and battery life. Hopefully Microsoft will lift the curtain on the Surface 2 soon, which could potentially drive prices on the Surface Pro down and finally move the tablets off of store shelves.

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Of course, it’s probably important to keep in mind that making more of something will drive down the price of each one. It’s always good to remember the economies of scale. If Microsoft orders the creation of more Surfaces, each one becomes slightly cheaper. I’m sure that the company never imagined how sluggish the device’s sales would be, but even still, ordering so many could be what allowed them to keep the price as low as it was. Hopefully they’ve learned from their mistakes and whatever they come up with next will be the Windows tablet of our dreams.

  • I think I know why they made so many of the. 1st, they thought it was still the 1990’s where they held a near monopoly in the computing world and they could use the Windows and Office brands to get people to purchase them. 2nd, yes, I do think that they might have been forced to purchased lots of the parts in large quantities to get the price down enough to compete with Apple on price. 3rd, they forgot that Windows really does mean compatibility with the 15 years of Windows software. In the end, it does not look like they really do get who their customers are and what they want for the future in their technology. It is not the 1990’s anymore. Time is almost up for them.


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