"The bottom line will go down as their product mix changes." "The more you are into hardware, the lower the margin," said IDC analyst Rajani Singh last year. Those higher costs have eaten into Microsoft's once-famous margins, a move analysts expected as the company shifted to a device strategy by selling its own hardware. Microsoft said Surface revenue of $400 million for the third quarter had been more than offset by a "$645 million higher Surface cost of revenue," and explained the disparity by pointing out that "Surface product costs increased with higher volumes sold other costs grew as we read inventory lines for the Surface 2 launch and the holiday sales cycle." In the third quarter of 2013, Microsoft did not spell out the revenue versus cost of revenue comparison in such stark terms, but revisiting the SEC filing from late October makes it clear the company also spent more than it made then. ![]() The company also kept the first-generation Surface RT in its line-up, although at a reduced price of $299, in an effort to unload the 2012 tablet that was so over-ordered that Microsoft was forced to write off $900 million last year. Microsoft launched its second-generation Surface devices, the low-end Surface 2, which runs the scaled-down Windows RT, and the pricier Surface Pro 2, a notebook replacement powered by Windows 8.1, in late September.
0 Comments
Leave a Reply. |