Surface Tension - RT or Pro - Make me an Offer

Richard Fieldhouse (28 July 2013)

Microsoft Surface RT with stylus I see here that Microsoft are stressing about what to do with all those lovely Surface RT tablets that nobody seems to want.

With $900 million already written off, they are still asking whether they should they be selling the remainder at $349, $299 or at cost (around $284) or what...

Well..

Perhaps the most valuable instruction (that I now remember) from my MBA course was...

"Ignore sunk cost."

Steve has time to salute each Surface Windows 8 tablet as it leaves the warehouse

Microsoft should look on these numbers like 499, 399, 349, 299, 284... 250, 200... as just fodder for accountants, the question is what price should they set to get the inventory out of the warehouse before it becomes completely worthless?

And yet I suspect I detect Microsofties worrying their little heads about whether they will technically be making a loss on each box that goes out of the door.

There is, though, a point at which it becomes better to write down the whole lot to zero and put a match to the warehouse to avoid reputational damage. I believe Samsung have been known to do this - and look what happened to them!.