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gewg_ writes:

Eugene Kim writes in a TechSecurityUpdate.com piece:

Microsoft is bleeding cash from its Surface tablets and may soon have to consider shutting down the business altogether, Computerworld's Gregg Keizer wrote in a compelling piece against the Surface.

Keizer did his own back-of-the-envelope calculation to estimate that Microsoft has lost $1.73 billion since the Surface's debut in 2012. The total loss for FY2014 was $680 million, and it was $1.049 [b]illion for the year before, according to Keizer.

His calculations also revealed that in the June 2014 quarter alone, the Surface had lost $363 million, the largest quarterly loss for the Surface since Microsoft started releasing quarterly revenue figures.

He said some of the losses was due to massive write-offs from the Surface Mini, which never hit the market despite being ready for production, out of fear it would not sell well.

The loss also included some of the manufacturing cost of the Surface Pro 3, which only started to sell on Aug. 1. Because of its late release, only a small portion of its sales were included in the June quarter's earnings.

Keizer argued $1.73 billion may not be that big of a loss for a company as big as Microsoft, but it's still a sizeable figure considering it represented 3% of Microsoft's FY2014 gross margin. He said Microsoft's year-over-year revenue growth would have been almost 1% had the Surface unit broken even last year.