Microsoft, Nvidia Ready For Second Surface RT Despite Big Losses

Microsoft's $900 million Surface RT write-off Nvidia's 71 percent year-over-year drop in Tegra sales

Nvidia CEO Jen-Hsun Huang confirmed plans for a second-generation Surface RT in an interview with CNET and said his company is "working really hard" on Microsoft's next Windows RT tablet. Nvidia declined to comment on its Surface RT plans when contacted by CRN.

Last week, Nvidia released its second-quarter earnings report, showing a 71 percent year-over-year decline in Tegra sales, a steep decrease the company said it did not expect.

[Related: Microsoft Drops Surface Pro Tablet Price ]

In the report, Huang said the dramatic results came after a "particular platform just didn't do as well as we -- or frankly anybody in the industry -- had hoped."

Nvidia's Tegra 3 chip powered Microsoft's Surface RT tablet, Lenovo's Yoga 11 with RT and the ASUS VivoTab with RT. Both Lenovo and ASUS have removed RT tablets from their respective product lineups over the last few weeks due to lack of interest.

Originally, Microsoft Surface Pro and Surface Tablets with RT were exclusively sold direct through Microsoft's online and retail stores, bypassing the channel completely. In July, Microsoft approved 10 Large Account Resellers (LARs) to sell both tablets in the U.S., but it has yet to include remaining partners. Regardless, resellers say they have seen little interest in tablets with RT, though Surface Pro is slowly but surely gaining adoption.

SHI International in Somerset, N.J. is one of the 10 LARs authorized to resell the Microsoft tablets. Ed McNamara, director of marketing at SHI, said, "We're seeing slow but steady pickup for Windows 8, and we think it's only a matter of time before it takes hold."

Windows RT, however, is another story, McNamara said. "Windows 8 is a better option for business customers than Windows RT, so we're seeing a lot more Windows 8 and Surface Pro sales, for example, than [Windows RT] devices," he said.

Despite overwhelming evidence, there is little interest for tablets running on Windows RT. Huang told CNET he is hopeful for the coming version. Windows Outlook, Huang said, is expected to appear on new RT tablets, and he suggested the email app will correct the shortcomings of the first-generation RT tablets.

Microsoft told CRN it had "nothing to share" on matters of a second-generation Surface RT tablet.

PUBLISHED AUG. 13, 2013