Microsoft recently posted fourth quarter earnings for fiscal year 2013, which ended last June 30.  The software company reported annual revenue, operating income, and diluted earnings per share were at $77.85 billion, $26.76 billion, and $2.58 per share with a $900 million charge when it shaved off $150 on the Surface RT price.

Though the numbers already look bad for Microsoft, the extent of the damage hasn’t been fully disclosed – until now.

According to Microsoft’s 10-K report to the US Securities and Exchange Commission, the total Surface revenue for fiscal 2013 was just $853 million.  Though that may not seem too bad, you have to keep in mind that the number posted is the total sales of BOTH Surface tablets – the RT and the Pro.

But what’s worse is that Microsoft spent $1 billion for its sales and marketing budget for the Windows Division.  Which means the company spent $1 billion in ads to promote the Surface tablets and Windows 8.  Windows 8 and the Surface tablet haven’t even been around for a year, as Windows 8, Surface RT and Pro were launched October of last year, so the company spent $1 billion in ads in just eight months.

There’s nothing wrong in spending $1 billion for ads, since that’s typically how brands entice consumers to buy products.  Too bad for Microsoft, $1 billion worth of ads wasn’t enough to push its Surface tablets into the hands of consumers.

Maybe if Microsoft focused on how good their product is without making fun of Apple’s iPads, it may have sold more.  Yeah, the ads are fun to watch, but seriously, if you need to go so low, then people think you’ve really got nothing to offer.

6 Ads Microsoft could have done without

• Windows 8: Less talking, more doing
• Comparison: iPad vs. Windows 8 Tablet
• Windows 8: Surface RT vs. iPad
• Dell Tablet vs. iPad
• Surface Pro Commercial “The Vibe”
• The Surface Movement Commercial

Microsoft CEO Steve Ballmer recently announced the reorganization of the company wherein he described how the company will be focusing on releasing a family of devices.  The problem here is, Microsoft is a software company, and with the Surface tablets not doing too well in the market, is it really wise for them to release more devices?

Stop trying to make the Surface happen

Aside from busting out useless ads, 1610 Group Founder and Managing Consultant Scott Lowe stated some reasons as to why the Surface isn’t happening, no matter how hard Microsoft pushes.

“The iPad and the Android tablet markets have much more traction and much larger ecosystems than Microsoft has so far with the Surface and they have a much better consumer reach than Microsoft has.  One would that with Microsoft desktop dominance, and the laptops as well, that that may help them in the mobile race but it doesn’t seem to be helping them much,” Lowe stated during an appearance on this morning’s Live NewsDesk Show with Kristin Feledy.

He added that the poor Windows ecosystem has hugely affected sales of Surface tablets.

“Microsoft has practically begged developers to develop for the Windows 8 and the Surface RT but it really hasn’t happened yet.  There’s a lot of apps in the Windows Store but not useful apps that people use everyday.  There’s also confusion in really what Windows RT can do.  I think Microsoft did themselves a significant disservice when they tried to differentiate Windows RT and Windows 8 and made them look and act identically. People expect to be able to see some of their Windows products run on Windows RT tablets and that’s not possible because of the architecture,” aside from the general fact that Windows 8 has terrible reception.

For more of Lowe’s Breaking Analysis, check out the NewsDesk video below:

More platforms, more users

Quip, a new mobile word processor was just launched and it aims to bring document creation and collaboration to anyone, anywhere, even if they are using an iOS or Android devices, and even PCs or Macs.

It seems like Microsoft is not too keen on Quip moving in on its turf, as it has finally released the Android version of Microsoft Office.  This would allows Office 360 subscribers to view, edit or create Word, Excel and PowerPoint documents on their Android phones.  Yes, it’s only for Android phones, much like the iOS version, which was released in June, is only for iPhones.   It seems like Microsoft is snubbing the tablet market, which is kind of curious since people are more inclined to use mobile devices with bigger screens to create or edit documents.

If Microsoft really wants more people to use Office 365, it better start looking closely into the tablet market before Quip gains much more traction.  Quip is free and quite easy to use, so it will not be surprising if it quickly becomes popular.  Also, aside from creating documents, Quip allows for collaboration with its messaging tool – so it’s a one stop shop for busy professionals.