Surface tension
Until a few hours ago, Microsoft’s stock prices were in free-fall, down 11 per cent and showing little to no signs of recovery. The crash comes soon after news reports that the company had slashed prices of its new Microsoft Surface tablet down by 30 per cent and that ‘inventory adjustments’ for the Surface RT have caused the company losses to the tune of $900 million.
According to reports released by the company earlier, Microsoft had ordered the manufacture of between 3 to 5 million Surface RT tablets, but sales have slowed considerably as the company launches in a market that is already full of fierce competitors in the form of Apple and Samsung. The Surface RT is nearing two million units sold, but the rapid slowdown in sales made Microsoft adopt the drastic cut in sales.
Microsoft posted a net income of nearly $5 billion this year, up 10 per cent from last year, but its stock prices still fell and eliminated a staggering $20 billion of investor wealth. This is a good case study in the power of public perception. Over the past year, Microsoft has made massive strides in the enterprise market — enough to post substantial growth despite a poor showing on the consumer goods market. The reason for this is simple — failure in consumer market is far more visible than success in enterprise.
The reason for the failure of the Surface’s Windows 8 RTM OS is easy to pinpoint with the power of hindsight. Despite the slick new user interface — the absence of conventional features such as the Start Menu dissuaded users who were comfortable with Windows and looking to use it in tablet form, the lack of backwards compatibility meant that the App ecosystem for the OS was pretty much non-existent.
There is already news that Microsoft is working on a new OS — a Windows 8.1 RTM — to add useful old-school Windows features that are missing in the current OS. I would advise new users to wait a while for the platform to mature before purchasing a Surface tablet, on the other hand, advanced users who are confident of their ability to mod OSes can pick up the device while the prices are slashed.
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