Fake News: Microsoft to End Surface in 2019?

Posted on October 5, 2017 by Paul Thurrott in Microsoft Surface with 54 Comments

Fake News: Microsoft to End Surface in 2019?

Don’t believe reports that Microsoft is planning to shutter its Surface hardware lineup in 2019. That is just speculation and wishful thinking.

I want to be very clear about this. There is nothing in these reports that claims to have insider information that Microsoft is planning such a move. Literally, what we have here instead is a single market researcher who is reading into how he believes Satya Nadella will behave. And a few representatives from PC makers who are clearly still burned that Microsoft has shown up out of nowhere to compete with them and show them how to build nice-looking PCs.

Of course, this is Microsoft and anything could happen. But these reports, these things that people are so worried about today, are just fabrications.

So breathe. Relax. And let’s look at the reports.

According to the ever-reliable Register, the CEO of Canalys, a market research team I never reference, said that Microsoft would exit the Surface product line because he is a “software guy, a cloud guy,” He also pointed to the demise of the smartphone line as corroborating evidence.

“The Surface performance is choppy,” he said. “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?’ [Microsoft will have a lot of cost-cutting to do, he claimed, and] Surface will be the first target.”

To be clear, that is just an opinion. So we all have those. What else happened?

The Register also notes the following statement by Lenovo corporate president Gianfranco Lanci, from the same event.

“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,” he said. “And frankly speaking, it is difficult to see why they should keep losing money. For them it is a very difficult exercise to run hardware products business, they need to be careful about every single detail as the margin on this is so thin.”

So, this is also an opinion, and this time from a representative of a company that is both a competitor and a partner with Microsoft.

The thing is, are Microsoft’s hardware initiatives really all that expensive? Phone was, but only because it owned all of the factories, manufacturing facilities and employees, and their expensive European benefits packages, that came along with the Nokia acquisition. With Surface, Microsoft has none of those issues, or those costs. This argument seems specious to me. Worse, actually. It sounds like wishful thinking from a competitor in the premium PC space.

What else have we got?

A Dell guy claiming that Microsoft may “slow down” Surface a bit, which I’ve argued they’ve already done.

And that’s it.

Guys. This is nothing.


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