What’s under Microsoft Corporation (NASDAQ:MSFT)’s Surface?
The smartphone wars are heating up and so are the tablet wars. Microsoft Corporation (NASDAQ:MSFT) has been facing turbulent times especially due to the drop in personal computer sales that have showed no signs of abating. Microsoft needs to gear up and make its presence felt in the tablet field.
However, when MSFT reported almost a $1B write-down on its Surface RT, investors heaved a sigh of relief. This write-down is a staggering one but not shocking by any means. So, should the company’s investors give up on the company’s tablet strategy?
The Surface RT runs on the Windows 8 interface. This was launched when Apple was the tablet shark. Towards the end of the quarter, MSFT faced a write-down of $900M. Even extensive advertising campaigns had not helped in improving RT sales. Adding fuel to the fire is Google who has updated its Nexus 7 tablet.
At a slightly higher price, the latest Nexus 7 launch has a higher resolution, is thinner and operates on a Snapdragon S4 pro processor. In an effort to counter this, MSFT has chopped the RT price by $150 and brought it down to $349. Last year, there was a rise in distribution and this device is now available across 29 markets in 10,000 locations.
Despite the fact that the Surface tablet sales have been weak, it is of primary strategic importance to the company. There is a possibility that the company may do a rethink on the TR version and may end up scrapping the line altogether and channelize its energies on the Surface Pro. What the company can probably do is reduce the market-budget while it is allocating funds for developing a less-expensive and lighter device. This may add the attraction quotient and lead to an increased interest in the Windows 8.