At an internal meeting, Microsoft CEO Steve Ballmer admitted that the company overproduced the Surface RT tablet, leading to its recent $150 per unit price cut. As quoted by The Verge’s Tom Warren, Ballmer plainly explained that the company “built a few more devices than [it] could sell.”

But we already knew that.

In its most recent quarterly earnings release, Microsoft took a $900 million charge relating to the Surface RT tablet line, essentially admitting that the inventory that it has on hand was not worth its previous internal valuation; you can’t cut the market price of a product that you have in a warehouse and not lower its value on your books. The write down cost Microsoft $0.07 per share. It missed expectations for the quarter.

Microsoft has been on a mission to clear Surface RT inventory for some time. As I wrote earlier this year, through a combination of giveaways and discounts, Microsoft was moving to liquidate what appeared to be mountainous superfluous unit volume of its ARM-based Windows tablet hybrid.

At that time, Microsoft released a bland statement, saying that the offers and handouts were in “response” to the “positive reaction” Surface had enjoyed since launch. That felt a bit backwards: If response had been so strong, why give away a single device or discount? Wouldn’t organic demand be sufficient? Well, as it turns out, reaction hasn’t been overly positive, so the entire argument was logically moot.

Ballmer said something else during the meeting that is a non-surprise: Microsoft is not selling as many Windows devices as it would like. We knew that, too. The figures released quarterly that describe the PC market are brutal – and dropping. Even Apple is suffering from declining Mac sales in the face of nearly insurmountable headwinds that it helped to create with its leadership of post-PC product categories.

Next-generation Surface devices are being designed and tested. I suspect that Microsoft learned its lesson regarding production volume: Prove product-market fit first, and then kick the afterburners.

Top Image Credit: BUILDWindows

Xbox One

Microsoft listed off a list of titles coming to Xbox One back at E3, but it’s Gamescom time, folks, and that means we get to find out about quite a few more games coming to the console. As of August 19, the list of Xbox One games has grown to 50, with titles that should appeal to almost any kind of gamer. Battlefield 4, Call of Duty: Ghosts, and FIFA 14 will be coming with exclusive Xbox content, joined by 19 other titles that are exclusive to Xbox or will be arriving first exclusively to Microsoft’s console. Joining exclusive we already knew about like Killer Instinct and Forza Motorsport 5, are Powerstar Golf, Sunset Overdrive and D4, among others. Naturally, there’s a whole host of other games coming to the One as well, but we’ll let you peruse the full list over at the source link, so head on down to see what gaming goodness awaits in your next-gen future.

Read the full story at Engadget.

The signs of doom are all aligned for Windows RT, which looks like it could soon inhibit the same plane of oblivion currently occupied by Microsoft Bob. Ars Technica’s Peter Bright has written a thorough pre-obituary for the current incarnation of Microsoft’s first attempt at creating a tablet-centric operating system, which he calls “a lemon” that consumers are “avoiding… in droves.” Bright lists several reasons for Windows RT’s failure so far, but most of them boil down to the fact that the operating system as it’s currently built has no reason to exist. “In spite of having all the working parts of Windows 8, however, it can’t (officially) be used to run desktop applications, even if the developers of those applications are willing to recompile for the ARM processor,” Bright writes. “Instead, all applications must come through the Windows Store, and be built using theWinRT API.”

Read the full story at Boy Genius Report.

2013 02 09 10h06 30 520x245 Relax, Microsofts partial sellout of the Surface Pro at its online store doesnt mean much

Update: We have more data, which helps us to understand the situation. According to Microsoft’s Panos Panay, the company’s retail partners are also out of the Surface 128 gigabyte Surface Pro SKU. There have been numerous reports of Best Buy locations not having a single device in stock, so supply does appear to have started low, and declined to zero.

Microsoft is “working with [its] retail partners […] to replenish supplies as quickly as possible.”

As I noted below, the single data point concerning the US-specific Microsoft web store wasn’t enough information to declare victory. This new data, however, let’s us state that the Surface Pro is having, at a minimum, a launch that Microsoft can chart up as within its expectations.

Given the somewhat lukewarm press reception to the Surface Pro, the fact that the 128 gigabyte SKU has sold out on the US Microsoft online store feels like news; the media had it all wrong! That may be the case, but the fact that the device has in part sold out in its first day isn’t exceptionally interesting.

Here’s why: the Surface RT also partially sold out on its first day, and has since struggled in the market, moving perhaps 1 million units – that’s the upper end of expectations – since its introduction. Microsoft had anticipated stronger sales. And, even with those larger expectations, still allowed the device burn through its 32 gigabyte SKU online in its first day.

Having a device ‘sell out’ on its first day is always good for a press cycle.

In short, we’re seeing little more than a reprise at the moment. It’s somewhat fun to parse through why the Surface Pro would sell out its higher-capacity SKU, unlike the Surface RT which ran out of its lowest; this could be due to public reports concerning limited functional user storage in the 64 gigabyte model.

Adding to the mix is the fact that in the Canadian Microsoft online store, as reported in TechCrunch, the Surface Pro has not sold out. What we are seeing is a localized demand in Microsoft’s home market for a single SKU of its new device. If the company had sold out both SKUs in short order, and in another location, that would mean much more.

Caveat to this: The Surface Pro is available at more locations than the Surface RT was at its launch. Thus, we could be seeing stronger total channel sell-through than one might expect. However, we have no evidence of that so it remains speculation.

For now, however, all we can say is that there was enough pent-up demand for the device that it moved a decent number of units its first day. So did the Surface RT.

Until we have hard data, hold tight.

Top Image Credit: Ben Lakey

It has been rumoured for some time that Microsoft has been considering adding its own media player within its new cloud storage service SkyDrive.

But this week the Liveside website has discovered snippets within the code of the newly streamlined SkyDrive service applications which indicate that Microsoft may be launching a direct media playback feature within their SkyDrive storage.

SkyDrive Media Player