Microsoft’s Surface business has gotten a fair amount of public attention since the debut of the Surface Pro 3 in 2014, but an expert panel at this week’s Canalys Channels Forum in Venice suggested the New Surface Pro and its related products could be completely off shelves by 2019. U.K. tech site The Register has the full report.
Speaking first on the matter was Canalys CEO Steve Brazier. He said because Microsoft CEO Satya Nadella has a history in software and cloud computing, the continuation of a hardware line like the Surface would eventually be off the table. He further added the following rationale:
“The Surface performance is choppy; there are good quarters and bad quarters, overall they are not making money. It doesn’t make sense for them to be in this business. When the capital expenditure challenge that Satya Nadella has taken Microsoft down becomes visible to Wall Street, everyone will ask him ‘Why have you gone to a low-margin business?’ Surface will be the first target.”
Lenovo COO Gianfranco Lanci took Brazier’s thoughts one step further. “It might be earlier [than 2019],” he said. “Microsoft is making a lot of money on cloud, making a lot of money on Windows and Office but losing a lot of money on devices… It is difficult to see why they should keep losing money.” Also in attendance, Dell Chief Commercial Officer Marius Haas said he could see a scenario where Microsoft would “slow down a bit” in the hardware space.
Still, there’s reason to be skeptical of these opinions. Both Lenovo and Dell could greatly benefit from the Surface business coming to an end. They might be speaking negatively about Surface because they want it to fail. While both manufacturers partner with Microsoft to support Windows 10, even the small group of passionate fans adopting devices like the New Surface Pro eats into their bottom lines.
Claims about Microsoft’s retreat from the hardware business have been around since Nadella’s arrival in 2014. More specifically, rumors that the Xbox console brand might be sold have been swirling since early 2015. Similar folks in business-oriented roles cited the same kinds of evidence, but none of those predictions have come to pass.
Still, there’s no denying that unimpressive Surface hardware sales have contributed to financial losses at Microsoft. The Register states cloud technologies and productivity services experienced double-digit percentage growth. In that regard, investing in Surface and consoles is undeniably weighing the company down. It could be precisely why Microsoft chose a more modest Surface Pro refresh this year and seems to be slowly ending support for the Surface Book.
The New Surface Pro is available now starting at $799.
Do you think 2019 will be the year Microsoft’s Surface business ends? Tell us in the comments section!