If you've read anything in business or technology news in the last couple of weeks, you're aware of the near $1 billion loss Microsoft reported recently on their current inventory of Surface RT tablets. You're probably also aware that a few days later, long-time Microsoft CEO Steve Ballmer announced plans for retirement in 12 months or less. Coincidence? You be the judge.
Those two events make it fairly plain that the first iteration of Surface RT hasn't succeeded as Microsoft hoped it would. However, they still have ~3 million of these devices in inventory, and are already talking about "Surface RT 2" (according to the articles above). So how do they make use of / liquidate the inventory they have now, and avoid ending up with another pile of excess inventory a year after launching the next version of the device?
1) Leverage the Partner Network
One of the bigger complaints about the Windows 8 ecosystem thus far is the number of apps available in the Windows Store compared to competitors. Granted, the Apple, Google, and Amazon stores have all be online for a much longer period of time. But Windows as a platform has been around much longer than Android or iOS. There are many, many small and mid-size software shops that have hundreds of thousands of applications for previous versions of Windows over the years.
I think Microsoft needs to engage this group, specifically through the Partner Network members, and get them working on porting all of these great tools to their new platform. They can potentially solve two problems here by offering a discount on the Surface RTs they want to get rid of as testing devices for companies looking to build an app for the Windows Store. "Renew your MSDN account, get $100 off a Surface RT". "Buy a Windows 8 development account, get $100 off a Surface RT". You get the idea.
Companies using Windows have typically been slow to adopt the next version. Grease the wheels a little bit to get things moving. Unlike a few years ago, there are some strong alternatives for many companies when it comes time for them to upgrade their workstations. Make sure they have good reasons (like all of the applications and tools they've used for years) to continue to choose Windows.
Let me say though that if the plan for leveraging the Partner Network looks like this, I really don't see things changing very quickly.
2) Offer incentives to schools
My son is starting K4 this year, and I had my very first parent orientation last week. To kick things off, the principal spoke briefly about the school's vision and approach to learning. On the subject of technology, he proceeded to list a number of device purchases they had made over the last few years: iPads for two grades, Chromebooks for two grades, iPads for two more grades, and probably another set of Chromebooks sometime this coming year for two more grades.
See what's missing from this list? Do I have to say it?
My mom works in a different school in the area, and they're doing the same thing - equipping each student with a device; all non-Microsoft in her case as well. My guess is that this is happening in schools across the world, not just suburban southeastern Wisconsin.
Schools are gradually replacing their old "computer labs" of the 90's, which were primarily powered by Microsoft products. As they gear up (literally), there's a big opportunity here to help the students learn by using these devices, and there's no reason they couldn't be using the Surface RT. I don't think Microsoft can afford to miss the boat here. They need to be offering some incentives to schools to use their devices. According to this article, there may have been some plans for a program like that, but it doesn't seem to have been implemented. Drop whichever suit pulled the program and get back to this great idea.
3) Change who/what you're competing with
Take a look at an "average" iPad user. While this is a humorous exaggeration, there is some truth here; this person is probably never going to buy the Surface RT. They're happy with the product they have. When Apple releases the next iPad, they'll get it, regardless of what else is available.
So why bother trying to convince them otherwise? To paraphrase the immortal Ben Kenobi, "These aren't the users you're looking for."
Look, the Kindle Fire is ~$199. The Chromebook is ~$249. A Sumsung Galaxy 3 is ~$299. I'm not sure if they can go this low with the investment made in the current product, but I think it's where the Surface RT needs to be priced and marketed to move. I definitely think they need to target this price point and market space with the "Surface RT 2" hardware specs.
They need to attract more users to the Windows 8 / Store platform, and making a very affordable device is a great way to do that. Heck, that's how Windows PCs came to dominate the market in the first place - lower price points.
I think it will be interesting to see what the company does with this product over the next 12 months or so, especially with some of the internal transitions they have going on. I really hope they can take that new agile mentality and look for some opportunities to improve and see the success they were hoping for with the Surface RT.