Microsoft CEO Steve Ballmer has admitted that the company built too many Surface tablets, and it's not selling as many Windows devices as it wants. During an internal town hall event earlier this week, Ballmer and COO Kevin Turner both addressed the recent $900 million hit for Surface RT and the sales pace of Windows across various devices. According to several sources, Ballmer openly discussed Microsoft's focus on securing Instagram for Windows Phone, and its plans for the next-generation Surface. Neowin first reported parts of the meeting.

"We built a few more devices than we could sell," admitted Ballmer when referring to the slow Surface RT sales. Microsoft recently cut the price of its Surface RT tablets by 30 percent worldwide, and Ballmer and Turner reiterated in the internal meeting that the huge writedown was a price adjustment that was necessary to sell Surface RT devices. While Ballmer didn't provide a sneak peek at the next Surface, we're told he confirmed new devices are currently being tested with incremental improvements. We understand Microsoft has been testing Surface devices with the new Qualcomm Snapdragon 800 processor.

"We're not selling as many Windows devices as we want to."

Ballmer also briefly discussed the performance of Windows. "We're not selling as many Windows devices as we want to," he said, referring to phones, tablets, and PCs. A lack of devices in retail stores hasn't helped Windows 8's initial prospects, and Microsoft is now focusing on the back to school period and the holiday season to ensure Windows 8 and Windows 8.1 devices are readily available. Microsoft recently teamed up with Best Buy to open special Windows Stores in over 500 locations.

The Verge reached out to Microsoft for comment on Ballmer's internal town hall, but a spokesperson refused to discuss the meeting.