Microsoft Isn't Giving Up On The Surface Tablet Even Though The First One Was A Dud

Despite taking a $900 million write-off on Surface RT, and slashing prices to $350 from $499 to get some consumer love, Microsoft is not giving up on the tablet, says Julie Larson-Green who runs the engineering of Microsoft's hardware business.

"We've learned a lot," from the first generation of the tablet, she said, speaking at the Microsoft's analyst meeting in Bellevue, Wash.

Because RT uses an ARM processor, which has great battery life compared to Intel processors, Microsoft thinks of RT as the "best" parts of a tablet and a smartphone in a one device, she said.

With RT 8.1, this tablet now include Outlook and the folks at Microsoft think that's going to make it more popular with business users. Right now, it is most popular with students, she said.

Larson-Green likened RT to the Xbox game console. When Xbox first came out it was not well received with very few games available for it. Flash forward 13 years and Xbox is popular.

Microsoft next week will be announcing its new generation of Surface devices. We'll see then if Surface RT 2.0 brings something special to the market.