The Surface project is far from over. Today Microsoft announced that it is adding several international resellers and distributors of the Surface RT and Pro tablet hybrids. The move mimics what Microsoft announced for the U.S. in early July.
That news clipping saw CDW and others begin to vend the Surface line of tablets to large customers. Microsoft started the Surface sales cycle last October with heavy constraints on where you could buy one. The move backfired in a sense, as sales have been lackluster, though due not only to that single issue.
Since that partial gate stumble, Microsoft has worked to implement new markets and sales channels for Surface. It needs more avenues of sale, frankly, and today’s news is a welcome push on that front. Here are new countries, via Microsoft, in which the Surface will enjoy new distribution points and sales vectors: “Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK.” And Canada.
Microsoft calls today’s news “a big step forward in Microsoft’s ongoing commitment to the commercial expansion of Surface.” That is true to a point, but it is also a big score on the board to combat the narrative that the Surface project has been enough of a financial dog that Microsoft will abandon it. I’ve argued that that isn’t the case, as akin to the early days of Bing, Windows Phone, and the like; Microsoft is more than willing to spend to buy market share. Today’s news corroborates the view.
Adding commercial sales channels to the Surface line matters in that the Surface Pro has been – relatively – well received by companies and their denizens. Better, it can be said, than the Surface RT by consumers. So, expanding the ways in which companies can pick it up in bulk could be a boon for Surface revenue and unit volume, two things both Microsoft and its Windows 8 project could use.
Microsoft took a $900 million charge in its fourth quarter regarding Surface inventory write-downs. Surface brought in $853 million in revenue through its part of Microsoft’s most recent fiscal year. On a run-rate basis, it is more than a $1 billion business. But that doesn’t make it profitable, and Microsoft is cutting Surface prices. A common thought around the Valley is that Microsoft was searching for Apple-level margins with Surface and that recent price cuts are harming those price-MSRP deltas. I’m not sure about that.
But it can be said that enterprise-level companies the world around are now more capable of buying Microsoft’s little device. And with Windows 8.1 just around the corner, perhaps they will.
Top Image Credit: Vernon Chan