surfaceblackMicrosoft just filed its annual Form 10-K with the Securities and Exchange Commission, and deep in the filing is the first public disclosure of the company’s revenue from its Surface tablet lineup: $853 million.

That covers the period from the fall launch of the Surface to the end of Microsoft’s fiscal year on June 30. The company doesn’t disclose the number of units sold, and the range of products from the Surface RT to the Surface Pro makes it difficult to derive an average selling price.

But hypothetically, if the average price were $500 (the original price of the base-level Surface RT), the revenue figure suggests that total units sold were in the range of 1.7 million units as of the end of June. That’s roughly in line with a Bloomberg News report in March, saying that the company had sold 1.5 million units as of that point, well below its original aspirations.

To put the Surface revenue in perspective, the $853 million amounts to roughly 4.4 percent of the total Windows Division revenue of $19.2 billion for the fiscal year. It’s also less than the $900 million charge that Microsoft took against earnings two weeks ago to reflect a $150 price drop in the Surface RT, attempting to clear inventory due to slow sales.

For more context, Microsoft also notes in the filing that Windows sales and marketing expenses rose $1 billion in the fiscal year, an increase of 34 percent, “reflecting an $898 million increase in advertising costs associated primarily with Windows 8 and Surface.”

In other words, Microsoft spent more to advertise Windows 8 and Surface than it made in Surface revenue.

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  • kingnacho

    While they spent more advertising Windows 8 and Surface, than they made on Surface. They’ve made considerably more on Windows 8 itself

    • orthorim

      Except they didn’t need to advertise Win8 very much at all since the vast majority of sales are OEM sales – buy a PC, buy Windows OEM.

      Windows sales are tied to PC sales so absolute numbers are going to be good. Whether or not a Windows version is in demand can only be determined by non-OEM sales and by sales uptick compared to previous releases. Win8 performed very poorly there, more similar to Vista than to Win7.

      All in all a colossal flop.

    • Kizedek

      It’s worse than that… That “considerably less” isn’t money they *made*! It’s just revenue, not profit!

    • Gary Horsman

      Perhaps. But don’t forget the decline in PC sales also means a decline in sales of Windows 8 on those fewer OEMs compared to earlier Windows installations.

  • WammTamm

    Never really thought about it like that, it does make perfect sense.

  • tthor

    Put it on the pile next to Microsoft Bob. I can see the museum spot now, right next to a looping video showing the Surface Dancing Commercial . People will be laughing for decades.

    • Frinkk

      I’m not sure which is worse: that while the Surface team at Microsoft worked hard on something that most people will never see, or that there was a team of professional dancers who spent their days on a Surface dance that most people in this country have seen.

      • Jesse

        To be fair, the dance performances were pretty good. Successful product or not, dancing in a nationally televised commercial for a major firm like Microsoft will look good on a resumé.

  • Ex-microsoftie

    Most companies would be amazingly happy selling 1.7 million copies of anything. But, by Microsoft standards, and in comparison to their competition, this is an abject failure. Microsoft needs to figure this out or they’re in big trouble.

  • boristhefrog

    Now that’s what you call a loss leader… except it ain’t….

  • Steven Hatfield

    It sounds like soon we’ll be able to watch TV shows that do not have 2 minute long Surface tablet infomercials built in.

  • ScottJL

    In other words, 1.7M suckers and their money were parted.

  • Alfiejr

    the “average” sales price can not possibly be the very lowest price in the entire range of Surface products (up to $1000+), $500! that is absurd. you must have flunked third grade math. and to state a sales “range” requires two numbers – a high and a low – and this article specifies only one – 1.7 million. you must have flunked writing composition too.

    if the Pro is the more popular of the two – not unlikely – then the average price might very possibly be, say, $853. which would equal just 1 million total units sold. so one could reasonably say approximately 1 million units sold so far.

    • Scott

      Assuming the lowest possible selling price produces the largest number of units sold – in other words, the least embarrassing result for Microsoft. The higher the *actual* average selling price, the worse the news is for Microsoft. (And how does the guy who ignores the convention on capitalizing the initial word in a sentence get to claim the moral high ground on composition?)

  • Ae Wehr

    If they were to put FULL windows 8 on these things rather than a locked-down version… e.g. if they were to give consumers FREEDOM with their devices, they’d take the market by storm the same way they throttled apple back in they day by having a far more open API.

    • Billy Jack


    • Gary Horsman

      Aren’t you talking about the Surface Pro?

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