Microsoft also reported that the Windows Division's operating income fell 1.3 billion dollars, "primarily reflecting product costs associated with Surface and Windows 8, including the charge for Surface RT [Microsoft's tablet computer] inventory adjustments of approximately 900 million dollars. Sales and marketing expenses increased 344 million dollars, reflecting advertising costs associated with Windows 8 and Surface."
Amy Hood, CFO of Microsoft, said: "We reduced the price of Surface RT by 150 dollars to 349 dollars per device. As a result of this price change, as well as inventory adjustments for related parts and accessories, we recorded a 900 million dollars charge to our income statement.....we believe this pricing adjustment will accelerate Surface RT adoption and position us better for long-term success." source: Microsoft statement