Microsoft Generates 46 Percent Profit on Surface Tablet

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Software giant pockets $228 for each unit sold.

A teardown of Microsoft's Surface tablet has revealed that the software giant makes 46 percent profit on the device.

The world's largest online retailer is known to sell its Kindle e-readers and original Kindle Fire devices without making a profit as it's sold at cost price, with the company hoping to recoup its money through users purchasing books and apps on the tablet.

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Microsoft, meanwhile, is making a significant amount of profit when considering that Surface is the firm's foray into the tablet market, as well as its introduction into the hardware market. The Redmond-based company makes $228 for each unit sold.

Surface retails for $499 for its base unit, while the basic 16GB Wi-Fi-only iPad Mini variant sells for $329. Amazon sells the Kindle Fire HD tablet for $199.

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Zak Islam
Zak Islam
Contributor
35 Comments Comment from the forums
  • freggo
    The numbers are distorted of course as they do not take into account that some of the 'profit' has to be used to pay back the R&D that went into the devices.
    But than again, some 'reporters' are not too good with numbers or accounting matters.
    Reply
  • bak0n
    That will give them a grand total of 0 dollars profit from me. Next.
    Reply
  • deftonian
    They shouldn't compare the Surface to the iPad mini, they're in two different size / productivity leagues. They should compare the profit margin of the Surface to the full size iPad. I hate when reporters compare products that aren't in the same tier.
    Reply
  • krowbar
    Zak, just stop.
    Reply
  • Skeete_UK
    Comparing the Surface to the iPad mini is just silly. How about some proper journalism rather than this DailyMail style nonsense.
    Reply
  • abbadon_34
    How can you compare 3 entirely different devices, 3 companies, 3 OS, and 3 pricing models???
    Reply
  • goodegg
    Wait a minute.... Someone needs a refresher course in math. Either me or the article. If it costs you $1 to make something and you sell it for $2, that's a profit of $1, or 100%. If Microsoft if making $228 for ever unit sold, that means it costs them $499-228 to make or $271. If it costs them $271 and they sell it for $499, then their profit is 84%.

    Or am I too long out of college economics??
    Reply
  • deadlockedworld
    A TRUE APPLE CLONE! Finally, someone has done Apple justice and made a rip off with a similar profit margin!
    Reply
  • devBunny
    goodeggIf it costs them $271 and they sell it for $499, then their profit is 84%.Or am I too long out of college economics??
    The given percentage (46%) is the Profit Margin - http://www.investopedia.com/terms/p/profitmargin.asp

    You're thinking of Return On Investment - http://www.investopedia.com/terms/r/returnoninvestment.asp
    Reply
  • sykozis
    Not every companies has billions to spend on R&D, production and marketing. So, to see a company turning an actual profit off a product isn't surprising.
    Reply