We knew Surface RT was a horror show, but we didn't know how bad a horror show it was. Now we do. It's a $900 million horror show.
Microsoft has announced an inventory write-down of $900m on the Surface RT, which means the tablets it has are worth nearly a billion dollars less than Microsoft expected. The New Radical reckons that Microsoft could be sitting on a pile of six million unsold tablets; even the most generous estimate suggests three million.
Microsoft says it is absolutely committed to Windows RT and the Surface RT, and that it'll continue promoting the Surface RT tablet as a rival to Apple's iPad. Anyone else thinking of Monty Python's Black Knight lying there, limbs lopped off, shouting "Come back here and take what's coming to you! I'll bite your legs off!"?
I think we can all agree that the BlackBerry Playbook was a disaster, but it still managed to do 1.7 million units. According to The Guardian, the Surface RT has managed just 260,000. It's easier to sell thousand-dollar Surface Pro - 750,000 of them, according to the same report - than the much cheaper and supposedly sexier Surface RT.
What's the problem?
99 problems and the kit is one
There are several problems here. The most obvious one is that the Surface RT isn't good enough: the device is sluggish, the app selection was sketchy, and the price was too high.
Windows 8.1 and the price cut help a bit, but they don't address the second, more serious issue: what exactly is Surface RT for? Why would you choose one over an iPad, decent Android tablet or a proper Windows 8 tablet?
The third problem is the most serious, though. Microsoft has just written down nearly a billion dollars because apparently, at no point did anybody say "hang on a minute! This costs more than its rivals, does less, isn't proper Windows and doesn't work very well. Are we sure we want to manufacture millions?" That's like Ford shipping cars with square wheels and being surprised when they don't sell.
Microsoft may get it right eventually - it usually does - but if we need the customary wait for version three then it's probably too late: the brand damage is already done. Surface RT is looking awfully like the Zune music player, a flawed, supposed Apple-killer that Microsoft eventually perfected. Unfortunately by the time it did, nobody cared.