Microsoft CEO Steve Ballmer has officially said on the record that Microsoft’s Surface tablet, especially its ARM-based RT version, was a big mistake. The $900 million in losses suggests some six million units are still left unsold.

The revelation should not be surprising to those of us who rarely, if ever, see a Surface outside the walls of Best Buy or Staples. His statement, however, encompasses more than just his “We built more devices than we could sell” admission.

Instead, the real question is whether Microsoft should’ve made any tablets at all.

microsoft-surface-tablet-keyboardMicrosoft had two things working against it from the start. For one, Microsoft is so closely associated with its software that a move to hardware necessitated a true understanding of its brand so the hardware – like its software – fulfilled whatever Microsoft’s brand represented.

That didn’t happen. I know one thing: the Microsoft brand isn’t about flipping and dancing.

Here’s what also didn’t happen: Microsoft didn’t innovate, which was the second thing that worked against it. The Surface had a few interesting tweaks and additions to the tablet category, such as its touch cover and its Metro user interface. But those were cosmetic at best, not the innovative changes that could cause audiences addicted to the iPad to take notice.

Honestly, Microsoft should take a lesson from Google, which is also making the transition from software to hardware, and also truly innovating. Google understood that its brand was about seeing the world differently. (Anyone remember what the Internet was like before Google?)

Knowing its brand as well as it did led Google to its Google Glass, which represents a huge innovation and is “on brand” very snugly.

Microsoft’s hardware is seen as a fast follower, something very few consumers covet as a brand. A simple retool of the Surface, as Ballmer noted is underway, will not be Microsoft’s saving grace.

Microsoft has much more work to do than that.