[TR] Surface sales 'modest' so far, Ballmer modestly admits - Page 2

Originally Posted by Rookie1337 


You don't understand business do you? If MS was greedy they'd raise the price or even worse..do what you suggest and go for trying to capture the market at massive loss.
Amazon is selling at or near a loss on the hardware because IRC they make it up from both their walled in version OS and their tracking of user's habits on the device (which they sell I think). As for the nexus 7 I haven't heard what the situation with it is.

Originally Posted by Shiveron 

I don't understand business? What I wrote, was exactly the reason Amazon and Google are so popular. Look up the term loss leader. You sell the product at or even below cost, in order to reel in huge profits from the base products accessories and associated software. I am currently an operations supervisor with UPS at one of the largest shipping hubs we have in the states, with the only bigger hub in the country being the one in Chicago, and as part of my job I've had to learn quite a bit about the business side of the company, and the loss leading strategy is a massive part of that. We do the same thing. Our base service, costs us money, but we make up for it with all the services associated with it. You think shipping is expensive? It actually COSTS us money to move your package from A to B, but by agreeing to ship at and below cost, we nail down the logistics and processing sides of very large companies like office depot (our biggest account), newegg, cabellas, sierra trading, staples, blue mountain, etc etc. It's the EXACT same principle.
Windows 8 is a walled in OS. Just the same as Amazon. You have to buy THEIR apps to use on THEIR device. Those apps, cost literally pennies in bandwidth per download, yet sell for several dollars. The exact same thing with the Nexus. It's at cost, because they make up for it with app sales. So yes, M$ is being greedy. $500 for a $271 tablet is nearly 100% profit. ~84% to be more accurate. That's a MASSIVE profit margin. Bigger than anything else I can think of in the industry.

Originally Posted by Techologist 

Uh, Windows 8 is not a closed system. You are making stuff up. Also, apple takes in nearly 300 % or more on their devices (when just using the bill of materials as a guide).
ALSO, as if any of this actually needs explaining, Microsoft is such an open platform that they have to worry about offending their partners that make hardware to run Windows on. If they sold the Surface at cost (which would be completely silly on so many levels) then they would cause many other hardware manufacturers to drop the Windows platform entirely. How could Asus, HP, ect. compete if Microsoft undercut them so drastically?

Originally Posted by Shiveron 

Maybe if they weren't selling it for twice the cost of building it. I get it, people are preaching "oh R&D this, marketing that", but that's a load of crap. M$ is a mega billion dollar a year company, they could have easily afforded the R&D on this product without putting it out for twice it's construction cost. Take a hint from Amazon and Google. They're putting their tablets out at cost or just a few dollars above cost and their tablets are wildly successful. It's called putting out a loss leader, and M$ is just getting greedy about it. This tablet would be going like mad if it were 300-350, but no, it's 500. Cut the price, and quit trying to make up your R&D, marketing, w/e costs up right away and give it some time. Hell even at $300, the tablet itself would profit $29. Not much, but when you start selling several million units because your product is more accessible, then add in all the apps those several million users are going to be buying over the next few years, and i'm quite positive the profits would be pretty handy. Seems to be working splendidly for Google and Amazon, they can hardly keep up with demand when they put their newest tablets out for cost. Hell, I went into a Gamestop the Friday before last, to play with a Nexus 7, then when I went back in a few days later to pick up my copy of Halo, they were sold out again.

Originally Posted by Techologist 

You've obviously never actually seen the screen on the Surface.

Originally Posted by mott555 

I thought they were sold out at one point? "Sold-out" and "modest sales" shouldn't be synonymous.