With reports going around claiming Microsoft have written off more than 1 billion of losses relating to its Surface tablet, we thought it would be a good idea to discuss just what went wrong with it.
The truth is that Microsoft’s entire strategy was a mess. They were well behind the Apple iPad and even the Android tablets when they first entered the market. Yet, the prices they were charging were ridiculous. In some cases, they were even higher than the iPad. It’s common business sense to charge a lower price to attract customers when you release a brand new product in a very competitive market. Compare that to a company like Bose Headphones, who have adapted very well to the increase in competition. Obviously, it’s a very different market we’re talking about, but still, it’s the way you operate a business that makes the difference.
The Surface tablet was definitely a good product. It looked sleek and had huge potential. But, the introduction of the initial Windows RT operating system was pointless. It was basically Microsoft releasing an unfinished product and charging a shedload for it. The best thing to do would have been to spend more time to develop the official Windows operating system and release when ready. They should have also encouraged developers to create apps for their platform. Giving away a couple of tablets to these developers for free would have been worth nothing to Microsoft. Or, they could have charged very low prices upon release instead of running multi-million dollar advertising campaigns. Instead, they were stubborn and continued on with their poor strategy, which ultimately cost them a lot of money.
It’s crazy to think Steve Ballmer is a Harvard Graduate and the CEO of Microsoft. It seems like he has single-handedly destroyed the company in the space of 10 years. Bill Gates would be proud.