While Microsoft’s recent announcement of an almost $1B write down on Surface inventory caught everyone by surprise, the fact that it was languishing was no secret. While I have written about Surface and Windows RT repeatedly in the past with both praise and criticism, I see the write down as a PR exercise which will allow a phoenix to rise from the ashes, kind of like what may happen to Amanda Bynes career if she isn’t really suffering from some sort of mental condition. Let me explain…

Windows RT and Surface have received more free publicity in the last week than it did during its entire time in market. It does have some major weaknesses in its current form. The lack of Outlook in shipping units, and the struggling to cope with the workload Tegra 3 platform are the two primary ones. I don’t see the lack of x86 compatibility as that big of a deal for the intended uses of the Surface as a companion device, but for some this was a deal breaker.

By taking the financial hit in one go, in the same financial year that a certain high profile Microsoft exec departed, it can be rolled into the other mistakes that are attributed to that person, regardless of how applicable they really are. “Oh yeah, we screwed up, but it’s his fault. No, really, it is…” If you are pun oriented, you could say that Microsoft wanted to start afresh with a clean slate.

So if Microsoft is already addressing the Outlook situation with Windows 8.1, and the assumed hardware update comes along, Microsoft won’t be burdened with the sales performance of old units moving forward. As someone who purchased another Surface unit for $99 at WPC13, alongside the discounted Surface Pro, I’ve already benefitted from something bigger than the current price cut, and strong sales at a lower price point show that there is demand if the price is right. If you pay less, you expect less.

This write down also leads into something that I alluded to in this post, in which I believe Microsoft will take an Apple like approach of offering the n-1 version of their hardware products as the entry level offering. It allows old stock to be moved without calling it old stock, and can be priced very flexibly to allow Microsoft to gain market share even if buyers are purchasing out of morbid curiosity or ridiculous pricing promotions.

The question still remains though about the viability of Windows on ARM in the long term, especially with some of the promises that Intel is making on the Atom front. Microsoft can easily backpedal out of ARM by changing the messaging to supporting System on Chip, and then moving to Atom. But by the time that happens, will x86 still be that big a deal? I’m guessing yes, it’s still going to be a showstopper for some people.