Nerval's Lobster writes: Last fall, Microsoft launched its Surface RT tablet with high hopes. The sleek touch-screen ran Windows RT, a version of Windows 8 designed for hardware powered by the ARM architecture, which dominates the mobile-device market; it also included a flexible keyboard that doubled as a screen cover. Microsoft executives told any journalist who would listen that Surface RT would position their company as a major player in the tablet arena, ready to battle toe-to-toe with Apple and various Android device manufacturers. Fast-forward to this week, and Microsoft announcing its financial results for the quarter ended June 30. Amidst metrics such as operating income and diluted earnings per share, one number stood out: a $900 million charge (the equivalent of $0.07 per share) related to what Microsoft called “Surface RT inventory adjustments.” Microsoft had already slashed Surface RT prices by $150, so that nearly-billion-dollar charge wasn't a total surprise — but it did underscore that Surface RT is a bomb. From the outset, Surface RT had an issue with the potential to mightily trip up Microsoft: While Windows RT looks exactly like Windows 8, it can’t run legacy Windows programs built for x86 processors, limiting users to what they can download from the built-in Windows Store app hub. While the Windows Store launched with 10,000 apps, that seemed paltry in comparison to the well-developed Android and iOS ecosystems. There’s likely nothing that Microsoft could have done about this—every platform has to start somewhere, after all—but the relative lack of apps put Surface RT between the proverbial rock and the hard place: it couldn’t rely on Windows’ extensive legacy, and it didn’t have enough content to make it a true contender from the outset against the iPad and Android tablets. Then there was the matter of price. Microsoft could have taken the Amazon route and sold Surface RT at a relative pittance in order to drive adoption—something that made the Kindle Fire a sizable hit. However, that sort of pricing scheme isn’t in Microsoft’s corporate DNA: it only cut Surface RT’s price several months after release, as a defensive maneuver, when it’s likely to do much less good.
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