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Why Is Microsoft Setting More Money On Fire With Surface 2? 616

Nerval's Lobster writes "Never mind that sales of the original Surface totaled a pitiful $853 million in its first few months of release, or that the tablet failed to make Microsoft an up-and-coming player (or any kind of player, really) in the mobile-device wars: Microsoft's now rolling out Surface 2 and Surface Pro 2, which feature upgraded specs and accessories but no radical adjustments to the first generation. Why would Microsoft pour good money after bad? The answer could be outgoing Microsoft CEO Steve Ballmer, who late last year released a memo suggesting that Microsoft was evolving into a 'devices and services' company. 'There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface,' he wrote. 'In all our work with partners and on our own devices, we will focus relentlessly on delivering delightful, seamless experiences across hardware, software and services.' That meant Surface (then on the cusp of release) was clearly a harbinger of the company's future direction — and canceling the project after the first generation would have been a stinging refutation of Ballmer's strategy. By spending the money and resources on a second device generation, Microsoft manages to save a little bit of face, albeit at considerable cost. But imagine the hilarity that'll ensue if this second generation goes down in a huge ball of flames like the first."
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Why Is Microsoft Setting More Money On Fire With Surface 2?

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  • by digsbo ( 1292334 ) on Tuesday September 24, 2013 @11:32AM (#44936159)
    Yes. It's called "Escalation of Commitment", and it happens in larger firms, too, and Government. Also with individuals. A good counter-example is HP ditching WebOS and now selling Android tablets.
  • Re:XBOX? (Score:5, Informative)

    by i kan reed ( 749298 ) on Tuesday September 24, 2013 @11:43AM (#44936381) Homepage Journal

    Not annualized profits, where years have been profitable. Division lifetime profit. like this [neowin.net]

  • by SoupGuru ( 723634 ) on Tuesday September 24, 2013 @11:52AM (#44936539)

    I loved that Best Buy commercial where their employee recommends the Surface for car enthusiasts.

    "It's great! It has a USB port, One Note for taking notes, and Excel for tracking everything!"

    Really? Excel is one of your top three selling points to consumers?

  • by Morpeth ( 577066 ) on Tuesday September 24, 2013 @11:55AM (#44936603)

    Though I'm used to the default MS bashing here -- I have to wonder have many people have actually USED a Surface (esp the Pro) for more than 5 min in a MS store or at a friend's house?

    Any issues I have with it are really Win8 GUI related, not device related. I have an iPad, and while yes it's cheaper, it's functionality is a joke compared to what I can do on the S-Pro. Since it's a full-fledged O/S, I can run all the development tools I want/need, and it's great for a contractor like myself who needs something with real functionality, performance and mobility. My wife, who is not particularly technical loves it, and prefers it over the iPad now -- she's impatient as h*ll, and the iPad is a lot slower, and while I know some people won't believe it -- it crashes a frickin' lot. Sure, they're pretty user-friendly crashes (browser just shuts down with ZERO explanation), but crashed nonetheless. And I think it's insane they STILL don't have a #@$! USB port on iPads, wtf?

    Now, I think the RT isn't as useful (personally, but I want more than a tablet for mail/surfing), but the Pro is great imo -- the iPad is now is basically just my daughter's toy.

  • by joeaguy ( 884004 ) on Tuesday September 24, 2013 @12:04PM (#44936785)

    The Surface 2 makes no sense, but the Surface 2 Pro, it could be the sleeper device of the year if Microsoft can market it correctly, and get some good software on it.

    I went to a local Microsoft store and they demoed the Surface Pro to me, and I thought, oh that's nice, but its kind of a too thick and heavy to be a great tablet, and too small and quirky to be a great laptop. Then the salesman brought out the pen. "What? This thing has a pressure sensitive pen? That is amazing! Why didn't I know that?".

    Imagine a tablet that can run Photoshop. Real Photoshop, not some express version. A tablet where I can do real work on serious projects using serious software as easily as I can just flip through web pages. A tablet where I can switch between touch, pen, keyboard, and mouse easily, using the mode that is best for me to get my work done. A tablet that is not just a device to consume content, but to create it.

    That 6x video streaming demo and DJ pad shows that Microsoft is starting to get it. The Surface Pro is a device for creative professionals, and those who want to be one. While Apple has always been for that crowd, they haven't been paying attention to their needs quite so well lately. You have to use esoteric things like Thunderbolt. There are no tablets, or touch screens, or pen screens, and its all rather expensive. Plus, the surface actually looks cool.

    So Apple, a high end company, became a device company and its been pulling them down to the lowest common denominator. Microsoft, which was the lowest common denominator, becomes a device company and its pushing them toward the high end. Its interesting how changes of fortune have reversed their roles.

    Anyhow, I'm a Linux guy so I probably won't be buying one, but I am glad someone other than Apple is finally paying serious attention to the market for creative professionals.

  • Re:XBOX? (Score:5, Informative)

    by medv4380 ( 1604309 ) on Tuesday September 24, 2013 @12:17PM (#44937029)
    MS Quarterly and Annual Report of course. I like how gamers get tricked by the reports highlight of 6 Billion in profit that has more to do with Windows, Office, and SQL Server, but they're sure that the gaming division has something to do with the sky high profits. Here you can look them all up yourself here [microsoft.com]. If you sum up all the quarters since the inception of their entertainment division you'll see that it barely accounts for anythings. Not to mention that there is a loss line that all the divisions share, but you'd be hard pressed to figure out what percentage the Entertainment Division is responsible for.
  • Re:XBOX? (Score:4, Informative)

    by ProppaT ( 557551 ) on Tuesday September 24, 2013 @12:18PM (#44937057) Homepage

    Up until very recently, the 360 outsold the PS3. Not only with hardware but with software units pushed. While the Wii outsold everyone hardware wise, they undersold everyone software-wise, it it depends on which rubric you're using for success here. At this point Microsoft and Sony have basically both tied each other in the race. Sure, outside of North America and parts of Europe Microsoft did poorly, but that just goes to show how important the North American market is to the videogame industry. If you don't sell a single console outside of North America, but you dominate in North America, you're still doing pretty fantastic.

  • Re:XBOX? (Score:4, Informative)

    by JDG1980 ( 2438906 ) on Tuesday September 24, 2013 @12:25PM (#44937213)

    Every man and his dog seems to own one. If they're not in profit yet, where did the money go?! I know they lost a lot on the notoriously high failure rate of the early models, but was it really *that* bad?

    Yes, it was. The RROD fiasco cost Microsoft well over a billion dollars [forbes.com] to fix.

  • by Missing.Matter ( 1845576 ) on Tuesday September 24, 2013 @12:27PM (#44937241)
    Screen size, resolution, storage capactiy, storage speed, processor speed, active digitizer, RAM, x86 architecture are all advantages the Surface Pro has over the tablets you mentioned. The hardware is much more powerful and capable than pretty much any Android and iOS tablet out there. You get what you pay for holds in this context.
  • Re:XBOX? (Score:5, Informative)

    by doublebackslash ( 702979 ) <doublebackslash@gmail.com> on Tuesday September 24, 2013 @12:29PM (#44937275)

    The processor in the xbox 360 was a wholly custom part. It has extra components to encrypt and hash memory to and from main memory (only the hypervisor is hashed, the rest of memory is encrypted) as well as e fuses for locking out downgrades. It is also a 3 core part, definitely uncommon.
    Much more information in the google tech talk The Xbox 360 Security System and its Weaknesses [youtube.com].

    Really good tech talk, worth watching if you are interested in that sort of thing, as well as the original Deconstructing The Xbox Security System [youtube.com] for the original xbox.

    Enjoy!

  • Re:XBOX? (Score:3, Informative)

    by Zemran ( 3101 ) on Tuesday September 24, 2013 @12:33PM (#44937339) Homepage Journal

    ...or how important the non north American market is if you are not Microsoft and given that north America is the smaller market I think that Sony are still on to a winner. Let M$ focus on dear old USA and mop up the rest of the world...

  • by JDG1980 ( 2438906 ) on Tuesday September 24, 2013 @12:46PM (#44937547)

    One could easily have said the same thing about Microsoft Word. It was a copycat and it sucked compared to Word Perfect when it first came out.

    WordPerfect lost because it botched the transition from character-mode to WSYIWYG GUI. And it botched this because of crappy and shortsighted management that thought Windows was a fad.

    If anything, Microsoft's modern strategy with Surface is analogous to WP's errors: they came late to the party with a subpar entry, and expected to win because they won the last market.

  • Re:XBOX? (Score:5, Informative)

    by mcl630 ( 1839996 ) on Tuesday September 24, 2013 @01:14PM (#44938015)
    • Coal 37%
    • Natural Gas 30%
    • Nuclear 19%
    • Hydropower 7%
    • Wind 3.46%

    Source: eia.gov [eia.gov]

  • Re:XBOX? (Score:4, Informative)

    by Aqualung812 ( 959532 ) on Tuesday September 24, 2013 @03:12PM (#44939917)

    Windows tablets also DO NOT run native windows programs.

    True for Windows RT tablets. Not true for Windows Pro tablets.
    http://www.eweek.com/mobile/slideshows/surface-pro-vs.-surface-rt-10-reasons-to-buy-the-windows-8-pro-tablet/ [eweek.com]

  • Re:XBOX? (Score:5, Informative)

    by doublebackslash ( 702979 ) <doublebackslash@gmail.com> on Tuesday September 24, 2013 @03:28PM (#44940127)

    Nope! I was a bit checked to learn that it is a true-blue down-to-the-metal tri-core myself! but decapped processors don't lie http://www.dvhardware.net/article6606.html [dvhardware.net]

    Weird, right?

  • by Sarten-X ( 1102295 ) on Tuesday September 24, 2013 @04:14PM (#44940743) Homepage

    Stock car crashes often send debris hurtling down the track in the right direction, too. The car's still screwed.

    Personally, I think PowerShell is departing further from any UNIX ideals. Part of what makes UNIX ideal is that (almost) everything is plain text. Data passed between components should be serialized into a human-readable form, or at least something a human can easily understand with a hex editor. That means that replacing components is possible and fairly straightforward, and your debugger can be a plain text editor.

    PowerShell is different. It's the bastard child of COM objects and batch files, raised by .NET, with occasional visits from Crazy Uncle BASIC. Everything is a binary object, except for parameters being passed, which are strings, except for arrays which are neither strings nor regular objects, unless they're an object pretending to be an array... but either way, arrays being passed as parameters are subject to unpacking to become strings. Want to inspect any of this? Your tool is Microsoft's documentation. Since all of PowerShell's actual function comes from compiled libraries, you can only use what the vendor tells you to use, and good luck figuring out what exactly it's doing.

    In other words, now batch files can suffer from inaccessible code, too!

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