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Woeful Surface tablet sales revealed in Microsoft financial filing

Microsoft's sales of its Surface tablet (opens in new tab) have so far not even covered the company's advertising costs, according to a regulatory filing the company has made with the US Securities and Exchange Commission.

The filing was ostensibly made to record the fact the company had earned revenue of $853 million (£561 million) in its fiscal year ending June 30 from the Surface tablet. The Redmond firm did not disclose how many units of the tablet it had shipped or sold during the year though.

Earlier this month Microsoft took a charge for Surface RT inventory adjustments of around $900 million (£592 million), so that charge didn't even cover its Surface sales for the year ending June.

In addition, the company also said its advertising costs increased by $898 million (£590 million) from campaigns associated mainly with the new Windows 8 operating system (opens in new tab) and the Surface tablet, which is a main beneficiary of the operating system.

When launched, the Surface RT was aimed at competing with Apple's iPad and other tablets from the likes of Samsung, Google and Amazon. The Surface RT was built around an ARM-based processor running the Windows RT operating system, and was generally available from last October.

The Surface Pro, which runs Windows 8 on an Intel processor, became available this February.

According to analyst IDC, Microsoft shipped around 900,000 Surface tablets in the first quarter of this year, which gave it just a 1.8 per cent share of the tablet market, said IDC.

Apple was still in the lead with 19.5 million iPad shipments, giving it a market share of almost 40 per cent, and was followed by Samsung with an 18 per cent share, Asus on 5.5 per cent, and with a 3.7 per cent share.

According to analyst Strategy Analytics, the iPad and Surface devices lost market share to Android-powered devices - which includes Samsung - in the second quarter.

Apple's share fell to 40.4 per cent from 48.2 per cent in the first quarter of 2013. Strategy Analytics said tablets running Windows saw their market share fall to 6.4 per cent from 7.4 per cent in the first quarter.

The analyst said branded devices running Android held a 52.9 per cent share in the second quarter, up from 43.4 per cent.