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Microsoft Surface [3 Pro] hits $1bn revenue: Mission accomplished?


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I keep saying that once one has a good fast Windows 8.1 tablet all the play tablets fade into the background. I am not alone, read the talkbacks or comments at the bottom after the article. Having owned both Android and Windows RT (Limited one like Android and iOS tablets) I was so gratified at having both a full blown Windows computer and tablet in hand that I went in search of the perfect one. I keep coming back to the Surface 3 pro. But there are a couple of strong runners up one of which I own the Venue 11 Pro. HP went too large and heavy with the x2 follow ons. If they would just do a copy od the original sculpted aluminum x2, but with an Atom quad core and 4 GB of RAM/USB 3, 1920X1080 IPS HD, and very close to the weight of the original, and still in 11.6" screen size they could sell it all day for $899.99.

 

Until they do, the Surface Pro 3 will have the crown for weight, and features. And it looks like I might just have to go there.

 

Excerpt:

 

"Microsoft's Surface hybrid has broken though the $1bn revenue mark. Does this mean it can now be described as a success?

 

Has Microsoft's tablet PC finally come of age? Earlier this week Microsoft said Surface revenue hit $1.1bn for the most recent quarter - up 24 percent year on year - driven by Surface Pro 3 and accessories. Microsoft CEO Satya Nadella said of the rise: "The value proposition of being the most productive tablet is resonating."

 

The company revealed that the third version of the Surface, the two-in-one device first launched two years ago, is selling faster than previous versions. "Surface Pro 3 volumes are pacing over three times the rate of what we saw with Surface Pro 2," said Microsoft CFO Amy Hood.

So can it be finally said that Surface is a success? It depends on which metrics you use.

 

Breaking through that $1bn revenue barrier is psychologically important and useful for Microsoft and its marketing, but that doesn't mean Surface is generating huge amounts of cash for the company. Until the last two financial quarters it had been costing more money to make and distribute the devices than Microsoft was making from selling them.

 

That has now changed. As Jan Dawson of Jackdaw Research noted, in Microsoft's latest financial quarter the gross margins on Surface were "not only positive for the second time, but significantly so", although he points out the Surface line still probably loses money overall because of all the marketing spend involved. Still, he added: "I would guess it's not a million miles away from producing a positive contribution margin at this point, which is enormous progress from the early quarters."

 

According to Dawson's calculations, most of the revenue in the quarter came from Surface Pro 3. With the average selling price around $1,000, the quarterly revenue represents around a million unit shipments, with some accessory spending rounding out the rest. Dawson points out: "Chances are that's not much higher than previous quarters."

 

One million might seem good going - were it not for the fact that Apple sold 21.5 million iPads over the same time period (some may argue MacBook Air sales would make for a better comparison, of course).

 

So, if the device is not making lots of money for Microsoft and it's still a minnow compared to Apple's iPad, can Surface be seen as a success yet?

 

Perhaps. Surface has never been just about the revenue - it has also been a way of proving to consumers, business customers, and PC makers that a Windows slate could really work. Remember, it launched at a time when the PC appeared doomed and tablets were unstoppable.

 

In this case, Microsoft is maybe half (or, if you're being generous, two-thirds) of the way there. PC makers have finally been roused from their slumbers and are experimenting with some new form factors, of which Lenovo's Yoga series is probably the best known.

 

On this week's earnings call, Microsoft's Nadella was asked if Surface was cannibalizing PC sales. He responded instead that the device is instead expanding the market.

"One of the things that I feel very good about is the risk we took to introduce the two-in-one category. I feel now that we see that in fact [we] inspire a lot of activity in our own OEM ecosystem. We see many good designs coming, because it is viewed as a category that drives growth," Nadella said."

 

Much more in the articles and comments section here:

http://www.zdnet.com/article/microsoft-surface-hits-1bn-revenue-mission-accomplished/?tag=nl.e541&s_cid=e541&ttag=e541&ftag=TRE7ce1dc9

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