Microsoft's Surface Losses Approach $2B, How Much More Will Redmond Take?

It's hard to remember now, but there was a time when people were genuinely excited for Microsoft's ARM-based Surface RT and Surface Pro. When the company announced these products, they were seen as a much-needed opportunity for Redmond to spread its wings and tackle fresh markets and new challenges.

When the actual devices arrived, the consumer response was, well, "mixed" would be putting it kindly. The Surface RT nailed the form factor for many people, but the high price, low storage, and slow Tegra 3 processor, combined with Windows 8's many launch issues, killed the product. The Intel-powered Surface Pro delivered the performance end users were hoping for, but was thicker, heavier, and had an active fan. If Microsoft could've combined the two products, it would've had a blockbuster -- but instead it was forced to eat hundreds of millions of dollars in losses.

A new report from ComputerWorld shows just how bad those losses have been over the past two years.

Oof. That's red ink to the tune of of $1.7B over two years, and while that's relatively small potatoes compared to Microsoft's total income, it's still another business area where the company is losing money. With Nadella now firmly ensconced in the driver's seat, it's an open question whether or not he'll continue to allow the company to bleed cash in this fashion.

Surface Pro 3 Heats Up (And Not In A Good Way):

In theory, Microsoft's Surface Pro 3 could revitalize the segment and turn cashflow positive, but troubling reports have surfaced (pun intended) regarding the Core i5 and Core i7 models. Even the Surface Pro i3 exhibits troubling throttling characteristics, but the problem is reportedly much worse on the i5 and i7 products.

On the one hand, it's not surprising that stuffing a full-sized Core i7 into a chassis like the SP3 causes problems. On the other hand, these kinds of slowdowns, lags, and drops in GPU performance are precisely what could doom the hardware. Instead of finally getting the laptop replacement Microsoft promised Surface Pro 3 could be, users are left to kick the can down the road, wait for Broadwell, and hope that Microsoft doesn't just aggressively slash the system components to exacerbate the problem once again.

Of the three Surface Pro 3 models, the Core i3 is looking like the only system that can reasonably handle its own heat output -- and that means, unless you've got relatively modest needs, it's not going to be sufficient. Microsoft may still sell a fair number of units, but this probably won't be the system that reinvents the business segment.