Report: Microsoft is Refocusing its Surface Business on More Popular Form Factors

It’s been quite a weird week for Microsoft, which is now getting ready to kick off a special media event in New York City. Earlier this week, Chief Product Officer Panos Panay announced that he was leaving the company, and the exec is reportedly headed to Amazon where he will replace Dave Limp as the head of the company’s hardware team. Additionally, Microsoft saw its Xbox product roadmap leak this week, including refreshed Xbox Series X|S consoles that may launch next year.

Today, Business Insider is reporting that Panos Panay’s departure from Microsoft may have been a consequence of Microsoft cutting its investments in Surface hardware, with a growth that isn’t meeting the company’s financial expectations. While Panos Panay managed to make Surface a billion-dollar business over the years, there have been some flops along the way, the Surface Duo line being the latest example.

“The departure appeared abrupt, but insiders who have worked closely with Panay said he was unhappy with recent changes in the Windows + Devices division he ran and had long been rumored to be considering a move to Amazon,” Business Insider reported. The report also describes Panay as a “well-liked” but “demanding” leader, and the announcement of his departure was reportedly “a shock” to some employees.

The report also says that Microsoft has made “significant cuts” to its Surface business and canceled upcoming products such as new Surface headphones. “The plan is to focus more on Microsoft’s hits rather than the more experimental devices the company funded in flush times,” sources told Business Insider.

A separate report from Windows Central’s Zac Bowden confirms that Microsoft has reduced its investments in more niche Surface hardware. Bowden says that Microsoft has canceled new versions of its Surface Studio all-in-one PC, Surface Duo, and the education-focused Surface Laptop SE. “An 11-inch Surface Pro was also being considered at one point, but has now also been scrapped in favor of the Surface Go 4 with an Intel N200 chip,” Bowden also wrote.

Ultimately, a more focused Surface team that’s no longer distracted by less popular form factors may lead to better products. Surface devices usually receive praise for their design, but they often ship with outdated specs despite a premium positioning. Just like Apple, Microsoft is also quite slow to iterate.

The company is expected to announce a couple of new Surface products later today including the Surface Laptop Studio 2, the Surface Laptop Go 3, and the Surface Go 4. Unfortunately, it seems like new Surface Pro and Surface Laptop models will have to wait.