Posted by Chris Martin 07 August 2014
Why the Surface Pro 3 will be Microsoft's last Surface tablet
Microsoft recently confirmed that the Surface Pro 3 will launch in the UK, and other countries, on 28 August, but it might be the firm's last Surface tablet and here's why.
We've just got our Surface Pro 3 in for review (watch out for it very soon on PC Advisor) and while we're excited about it, there's a chance that it will be the last Surface we put through our test lab. See also: Surface Pro hands-on review: can Microsoft's Surface Pro 3 really replace your laptop?
Since the Surface series of Windows tablets launched in 2012, Microsoft has been losing money but it has continued to make new versions in the hope that it will eventually crack the formula and create one device to replace both your tablet and laptop.
It's a hard task and we've seen very few good attempts at a hybrid or convertible, let alone a great or perfect execution. Read: Inside the Surface Pro 3: What the specs don't tell you.
In the most recent quarter, ending 30 June, Microsoft posted revenue of $409 million for the Surface. However, it did not specify the cost of revenue meaning no way of working out the gross margin and therefore an estimate of profit.
Luckily, our colleagues at Computer World did some clever sums and worked out that the cost of revenue for the quarter was $772 million. That put the tablet in the red to the tune of $363 million, the largest single-quarter loss since Microsoft began providing quarterly revenue numbers.
Some of this was down to Microsoft "a decision to not ship a new form factor", also known as the Surface Mini. The firm reportedly pulled out of the launch with fears that it would not sell well enough.
That's not good, to say the least, and the total losses to date since the original Surface, Microsoft has lost a massive $1.7 billion.
With Microsoft cutting its losses on the Surface Mini, it clearly needs the Surface Pro 3 to be a success to avoid canning the device entirely.
The Surface Pro 3 is getting some great reviews (ours could well be very positive too) and while that's a good sign, it doesn't mean anyone is actually going to buy one. I've always wanted to want a Surface but never quite got there. I feel like most consumers would rather have just a tablet or a laptop and in some cases both.
Then there's the price. It starts at £639 in the UK which isn't bad if it can serve as both a tablet and a laptop but that's the most basic model and you can spend a whopping £1,649 for the top spec model.
The Surface Pro 3 may well be the best Surface yet but I still don't think Microsoft is going to sell enough of them to recover that loss, let alone launch further models.