It definitely seems that Microsoft has lost the battle with its Microsoft Windows RT systems sporting the stripped-down version of its Windows 8 software.
After today, Microsoft announced that it was making a $900 million “inventory adjustment” charge for its Surface RTs, parts, and accessories on July 18th, 2013.
Understanding Windows RT
Windows RT is a variant of the Windows 8 operating system designed for mobile devices that utilize the ARM architecture. It was first unveiled by Microsoft back at CES 2011. The primary goal of Windows RT was to offer a lightweight, power-efficient version of Windows that could run on tablets and other mobile devices, providing a balance between performance and battery life.
However, Windows RT lacked certain features and compatibility compared to Windows versions for x86 (Intel-compatible) processors. For instance, it could not run traditional desktop applications designed for x86 processors, limiting users to apps available in the Windows Store. This limitation was a significant drawback for many users who were accustomed to the flexibility of the full Windows experience.
The $900 Million Write-Down
The $900 million Windows RT write-down was a substantial financial hit for Microsoft. This write-down was primarily due to unsold inventory of Surface RT tablets, parts, and accessories. The Surface RT, despite its sleek design and innovative features, struggled to gain traction in a market dominated by iPads and Android tablets. Consumers were often confused by the differences between Windows RT and the full version of Windows 8, leading to hesitation and ultimately, poor sales.
However, the $900 million write-down was completely overshadowed by the results from other well-performing sections of Microsoft’s business. For instance, Office 365, the Microsoft subscription service via which it provides Office client and hosted Office server apps, was on a $1.5 billion run rate, up from the $1 billion run rate it hit in Q3 FY2013. This growth highlighted the success of Microsoft’s shift towards cloud-based services and subscription models.
Another area that got eclipsed was Windows Phone, which, along with Android patent licensing, increased $222 million for the quarter. This growth indicated that despite the struggles with Windows RT, Microsoft was still making significant strides in other areas of its business.
Lessons Learned and Moving Forward
The failure of Windows RT provided Microsoft with several valuable lessons. One of the key takeaways was the importance of clear product differentiation and communication. Consumers need to understand what they are buying and how it fits into their existing ecosystem of devices and software. The confusion surrounding Windows RT’s capabilities and limitations was a significant factor in its poor market performance.
Additionally, the experience underscored the importance of app ecosystems. The limited availability of apps for Windows RT compared to iOS and Android was a major drawback. Moving forward, Microsoft has focused on building a robust app ecosystem for its platforms, encouraging developers to create apps that can run across multiple device types.
In conclusion, while the $900 million write-down for Windows RT was a significant setback, it did not spell disaster for Microsoft. The company has continued to innovate and grow in other areas, learning from its mistakes and applying those lessons to future products. The evolution of Microsoft’s Surface line, which now includes highly successful devices like the Surface Pro and Surface Book, is a testament to the company’s resilience and ability to adapt to changing market dynamics.
Source: ZDNET
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