Microsoft and the Surface RT: Can’t Touch(Pad) This?

Last month Microsoft took a massive $900 billion writedown on the company’s disappointing Surface RT tablet inventory. Microsoft’s biggest hardware initiative since the original Xbox more than a decade ago, the Surface line of devices – both the RT and Pro models – were designed to bring Windows into a new age, an age of tablets, phones, and accessories as the center of the digital world rather than the PC.

However, the Surface RT was unable to penetrate either the tablet or laptop market. With a convertible form factor that encouraged users to purchase one of the two keyboards designed to click into place, which featured prominently in commercials, the Surface RT tried to be a laptop and a tablet. For the Surface Pro, which ran traditional Windows 8 and used conventional Intel processors, this worked OK. For the Surface RT, using a ARM processor, existing Windows software isn’t compatible, so only new software from Microsoft’s app store runs on it.

The Surface RT was a vehicle for the Windows 8 “Metro” style interface, but also included the classic desktop, albeit one that couldn’t run classic Windows apps. It also is unable to run Windows Phone 8 applications. So when marketed together, Windows 8, Windows RT, and Windows Phone 8 share many outward similarities but are very different under the hood. Apple makes Mac OS X and iOS, but the large portable device, the iPad, runs the same iOS as the iPhone and iPod Touch. Adding one more app store to the suite of device may have simply been one too many.

But if Microsoft is going to account for $900 billion in unsold Surface RT tablets, why not get them into customer’s hands? Just under two years ago exactly HP was faced with a similar dilemma. In 2011 HP TouchPad was the WebOS-based tablet competitor to the iPad. In the days before the Nexus 7 and Kindle Fire, non-iPad tablet that were good, inexpensive, or both were few and far between and HP decided that rather than continue to take their lumps trying to evolve the OS and hardware they would pull the plug. The 16 gigabyte model was slashed to just $99. SlickDeals had a field day. BestBuy was swamped. As someone who drove to seven stores before tracking down one of these rare beasts, it was quite the scene for a product that was completely irrelevant just 24 hours earlier.

Apps were downloaded, Android was installed, WebOS and the wireless charging capability were shown off to the mass market for the first time. Microsoft is not abandoning the Surface, including RT. Microsoft sees itself as a “devices and services” company now with devices including Xbox, Surface, and maybe their own phone someday too. While building out their retail stores one of the comments has always been “what can they sell?” because unlike Apple, Microsoft finds it’s software on third party devices more often than not.

But if a second Surface RT is in the works, why discount the existing RT to $349 and not just $99 and clear out the inventory? Microsoft could get units into the hands of both developers and the users who might give it a chance, except for the lack of apps. Even the secondary market for the TouchPad is surprisingly robust, with tablets still selling for about $99 dollars.

The Surface RT could be a thing if it’s really clearance priced to go. At least it would be in the hands of people outside of Microsoft stores.