Microsoft: No, We’re Not Killing Surface

Posted on October 10, 2017 by Paul Thurrott in Microsoft Surface with 49 Comments

Confirming my earlier report, a senior Microsoft official this week finally responded to rumors that the software giant would kill its Surface hardware lineup in two years.

“It’s so far from the truth,” Microsoft corporate vice president Panos Panay said this week, responding to the rumors, “a tabloid rumor of the week.”

And that, literally, is all we have to go on. Compare this single-sentence retort to the firm’s all-out PR campaign to discredit Consumer Reports, when that very credible consumer advocacy publication declared that Surface reliability was the lowest in the PC industry.

Based on internal Microsoft communications that I viewed, the company was not able to counter the Consumer Reports claims, which were naturally skewed by the unreliable Surface Book and Surface Pro 4 releases. However, it feels that newer products like Surface Pro (2017) and Surface Laptop are more reliable. And it can point to very positive consumer satisfaction data: Buyers who stick with Surface tend to really enjoy the products.

But Microsoft also responded publicly to that event in a lengthy blog post. With the latest rumors of a planned Surface death in 2019, the firm has been notably quiet. And I’m surprised that only a single executive has issued a single sentence to address the claims.

Regardless, it was immediately obvious that reports of the impending death of Surface were based purely on speculation and wishful thinking. Which is, of course, what I initially reported. In other words, nothing to see here.

As for Microsoft, it has one more chance to respond: Mr. Panay is appearing at a company event later this month in London, and I expect him to at least make a quip about it.

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Comments (53)

53 responses to “Microsoft: No, We’re Not Killing Surface”

  1. Avatar

    Kevin

    The problem here, is that many of those who were/are invested in the MS ecosystem, are now questioning whether or not they should see Surface as a viable long term solution. I was perhaps the biggest advocate for Surface and MS products at my organization, and as the Senior Windows Systems Administrator, my voice carries weight and significantly influences our purchasing decisions. I was persuading our VP to switch from Dell and Apple to MS products where it made sense and we have purchased small pools of their products to test (the complete line including Surface Hub for our conference rooms for when we move our offices), I can no longer in good conscience do this. I know of a number of other colleagues who feel the same and are now questioning whether or not it makes sense to invest the resources for a long term commitment to MS products and services given their recent history. These decisions by Microsoft will create a self fulfilling prophecy when what is most important to an organization is stability and operability and doubt concerning achieving those goals arise.

  2. Avatar

    Mark from CO

    Paul:


    This is what happens when a company lacks a clear and articulated vision. Do you doubt that if you asked 100 informed people what Microsoft's vision/mission is, that you would get 100 different answers, many (most?) being widely divergent? If its customers don't have a clue, do you think it is any different with its employees?


    The question we should ask is to what degree Surface is (or is not) supporting Microsoft's vision/mission. Because of the lack of clarity in Microsoft's vision (what it is trying to do), it's hard for us on the outside to really know the relative value of Surface to Microsoft. Hence, these rumors may well bubble up again in the near future.


    Mark from CO

  3. Avatar

    Tony Barrett

    Based, on that statement (ok, it's not even a statement), I fully expect Surface to be killed off then. It's only a matter of time.

  4. Avatar

    chrisrut

    A few years back Consumer Reports did a review of bicycles, and one of the ratings was for "Ease of pedaling." That's when I lost all respect for Consumer Reports...

  5. Avatar

    Bats

    The bottom line is that Microsoft is not making money with Surface. If that is not true, then Paul Thurrott needs to come out and say it. Afterall, he supposedly has access to the data. Anyway, I never really took what these analysts said, to be fact. I took it as their professional opinion based on facts and figures they have. 


    The fact is, we don't know if Surface is successful or not. We only know that, because Microsoft stated as so. Ya know...it's kinda funny, when I think about it, but Surface should have been a great machine. After all, like the Mac, it's a closed system, right? Yet, there are so many reliability issues and hardware failures for all the entire Surface line starting with Surface Pro 1 utlizing "Signature" Windows. In addition, I remember reading and hearing Paul stating how successful the Surface line was as well. Whether he came to that conclusion or on his own or got that from his Microsoft connection..I don't know. However, I do remember how shocked I was when Paul's posted something like the Top PC sales (or somethng like that) and Microsoft came in 6th or 7th. To tell you the truth, I was under the impression that Microsoft Surface computers were flying off the shelves.


    So, is it believable that Microsoft could get out of the hardware computing business? Heck yeah! 


    I don't think Microsoft will admit to that, though.

  6. Avatar

    Mcgillivray

    While they might not 'kill off Surface' - my guess is they will rename the entire hardware lineup to something else in the next 2 years. So, I don't think Surface will b e around any more in 2 years.

  7. Avatar

    William Kempf

    Hmm... a reputable and widely read source has data showing reliability issues versus a questionable source making claims without evidence that Microsoft was giving up on hardware all together. Wonder why one had a lot of lengthy rebuttal and the other was practically ignored?

  8. Avatar

    nbplopes

    Its alive until they killed it. I say this because historically in my book, the word of MS as an institution, when it comes to consumer products, with the exception probably of XBOX 360, its worth very little.


    On the other hand, from pure logical reason, I don't think they will do that form the next 10 years. Simply put, it would be political suicide with consumers, at least were the PC is concerned. One thing is MS to give up on smartphones as a system, they were never recognised as good on that field, another thing is the PC, were they are the lead system developer.


    For sure they knew that once they got in as they did it would be very hard to leave from a political perspective. Google did the Nexus, than coming back with Pixel, but for the public its not exactly the same thing. They left Nexus in a high point, limited production and sales were very controlled across Europe. Hardly I could find a Nexus anywhere. Only through online orders. Now Surfaces ... I find them in every PC shop, at least in Portugal.


    I can only imagine the news if that happens.


    Hypotheticall (Sarcasm) ...


    NEWS: "MS stops producing Surface PC due to lack of sales ..."

    PUBLIC: "What? The PCs are not selling? Are PC's so dead that even the leading system developer cannot make a business out of it?"

    MS: "No PCs are going fine, we just don't know how to make them reliably"


    So my thinking is that if they ever plan do leave, leave when their system are seen as the leading PC form in terms of reliability, performance and innovation. Not before.


    Cheers,


    Nuno

  9. Avatar

    jgraebner

    The original report was so clearly lacking in substance (just speculation by an analyst and a couple competitors) that I'm not surprised that Microsoft largely just glossed over it in response. Saying too much would just call more attention to it.

  10. Avatar

    harmjr

    Hey Paul is the Surface Hardware division profitable?

  11. Avatar

    thisisdonovan

    Microsoft has a long and rich history of cancelling devices and services, particularly consumer-centric devices and services.


    I wouldn't at all be surprised if Surface gets the can..... Microsoft is obviously moving away from the consumer space, just do it already so we can get on with our lives!

  12. Avatar

    MutualCore

    How can anything be safe from Nutella's dirty hands? His agenda is to shutter everything that isn't Azure/Office.

  13. Avatar

    Marius Muntean

    :)) And who on earth believes whatever MS is saying these days?? The biggest mistake is to ever trust any single word coming out of MS.

  14. Avatar

    JudaZuk

    Okay so a company that has shown it no longer can be trusted with keeping services and products, should now be trusted with saying they are keeping a product line?? *loL*


    Sorry Microsoft, you have made nothing to make me trust you

  15. Avatar

    Daekar

    Where does this idea that Microsoft makes no money on Surface come from? Everyone at the company where I work either has a Surface Pro 3 or later, or wants one. My Wife has one and never wants to have anything else again.

    • Avatar

      skane2600

      In reply to Daekar:

       "Everyone at the company where I work either has a Surface Pro 3 or later, or wants one."


      Kind of a silly statement, IMO. How much money does MS make from people who want a Surface Pro but didn't buy one?


      In any case, launching a product is expensive and can incur an opportunity cost if better alternatives exist. It takes many units sold to recoup the investment.

    • Avatar

      Greg Green

      In reply to Daekar:

      Popularity has nothing to do with profit. If the device costs more to make and market than they can get at the cash register than it's not profitable.

  16. Avatar

    trixiebigwasss

    I never thought i would learn how totrade and make money from it but after coming across SuperiorTrading System, they have taught me well and I'm proud to say that I am successful in mytrades. Google SuperiorTrading System if you want to learn as well.

  17. Avatar

    BoItmanLives

    "So far from the truth"

    Thats so not a denial.

    RIP, Surface


  18. Avatar

    Nonmoi

    A classic dark humor from PRC: "Government just comes out to confirm it by declares it as a rumor."


    One may argue that the same joke can apply to Microsoft, at the very least, some of the times.

  19. Avatar

    Jules Wombat

    Well that fills me with confidence, just about the same level of confidence I had in Microsoft Band, Windows Phone, Windows RT, Zune, XNA, Silverlight etc etc.

    Microsoft will dump Surface, as soon as it no longer makes any business sense, to compete with its partners. What really is the point of the Surface laptop ? was it just to please Mary Jo ?

  20. Avatar

    harmjr

    I just don't even get this. Now if the start having fire sales on Surface Pro's then I would be concerned. Also they would stop or shut down the Microsoft Stores they have opened if they have totally given up on consumers why have them. I really doubt when you think of where to go buy an Xbox you go straight to the Microsoft Store. Surface is still holding its value even refurbished Surface Pro 4 are still expensive an i5 8gb ram is $979 again refurbished. I do think the Surface Book may be killed off or revamped. I have never see a Surface Book or laptop in the wild. The Surface Pro's I now see them regularly. Just because they are killing off some consumer business does not mean Surface too as its cross section of consumer and business. Now come back around the year 2025 when all the big PC makers are making Surface clones cheaply then maybe but even then the device is iconic. Well hell by then we may all be running Android 30 diabetes edition.

    • Avatar

      MutualCore

      In reply to harmjr:

      Agreed. Surface pricing has stayed very stable for a long time now. If it were selling very bad, you'd be seeing fire sales all the time but it hasn't happened. I think Surface sales are solid, but not spectacular. It's a nice business to be in and can only improve.

  21. Avatar

    Rob_Wade

    First, there's nothing Panay would say that I believe. In fact, there's very little I'd believe from anyone with any authority at Microsoft. Their track record is to lose control of initially good ideas and then give it up after they grossly mismanage it. Especially since Nadella took over. We can easily point to periods where there were "no plans to discontinue" any number of the several products Microsoft later killed. So, you simply cannot say with any certainty that Microsoft won't get to a point where everyone else is doing a better job at Surface-like products and Nadella decides to axe it as well. You simply can't.

    • Avatar

      Dan

      In reply to Rob_Wade:

      Right, why would anyone believe anything he says. Like Panos is going to say "Well, we are thinking about canning Surface cause we really don't make any profit from the line."


      MS will most likely stop producing one version of Surface, then another, then another, until tehre isn't anything left of it.

  22. Avatar

    jimchamplin

    Big issue that they're always committed until they're not.

  23. Avatar

    Jason Peter

    If there is one consistent rule to the universe, it is this: When hardware fails to sell, Microsoft cancels it even if it says it won't.


    Thats not to imply that the recent reports are not garbage in and of themselves. They likely are. But reality is what it is. Ignore it at your own peril.

    Microsoft lent similar statements of support for the Zune, Windows Mobile, Windows Phone, Surface RT, just to name a few. But they failed to gain marketshare and make money. Zune and Windows Phone were media darlings, albeit with some rough edges. But they got good reviews. And yet, they didn't make money. And they were unceremoniously cancelled.


    Right now, Surface products bring in about 1/5 in revenue of what Apple does just in MacBook sales alone. Heck, Apple makes 3 times what MS Surface products do just in AWatch/iPod/ATV sales.

    Surface is not exactly a new product category anymore. Microsoft has been selling them for 5 years now. So theres no excuse there. And yet, they are still plagued by hardware reliability and core design issues, so much so that Consumer Reports states the whole Surface lineup cannot be considered a recommended product.


    Yes, I often hear that Surface products aren't meant to compete or make money, but to provide design guidance to the other OEMs. If so, thats a heck of an example on how to design and sell a product that doesn't make money...


    TL;DR: Microsoft PR cannot be trusted concerning products that have questionable sales histories. Your safer using your own best judgment based on their past history with other products, rather than emotional or geek fanboyism. That goes for any tech company for the most part.


    • Avatar

      carlrhorn

      I have owned the original surface pro and the surface pro 4...Both my wife and myself still use the original and they work great... As far as reliability issues I have yet to encounter any... I have 3 grown children and they all use surface pro's and love them... I am no fanboy as everyone discussed are professional people who use these devices for business.. A funeral director, STEM high school teacher, CPA, Attorney and medical school student... I from personal experience have not encountered any of these issues that consumer reports talks about...


    • Avatar

      MutualCore

      In reply to Jason_P:

      How has Surface failed to sell? Sure by Apple standards it's not a home-run business, but it's doing about $3.5 billion/year now.

      • Avatar

        RonH

        In reply to MutualCore:

        Only apple makes ape products. Everyone else makes windows products, not just MS.


        3.5 B is not bad


      • Avatar

        Jason Peter

        In reply to MutualCore:

        Apples Mac line has never sold well in comparison to both its other wares, as well as the Laptop/2-in-1 PC market. And yet, it sells more than 5 times that of the Surface category. Or 12 times if you consider the iPad, which has seen negative growth for several years now. Regardless of which market MS decides to set the Surface against, Apple wipes the floor with them both in revenue and in profit margins.


        And yet, the Mac line has never been competitive in the laptop/desktop market. I cant think of one major PC OEM that sells less product that the Mac line - except for Microsofts Surface products.


        And no, $3.5 billion in revenue is not a high mark by any means. Its actually quite low. With R&D, industrial design and marketing, manufacturing costs, etc, likely means that the Surface products have a razor thin profit margin. I imagine the Surface Studio is either dead even in profit or perhaps even a loss.

        The Surface range has brought a heap of praise for unique design, but hasn't done any good for Microsoft in sales. I imagine the Surface 4 and Surface Book warranty issues didn't help much either.

        For comparison, the entire line of Surface products have sold in their lifetime (since 2012) as many units as the iPad does in one typical quarter. The same iPad which has seen negative growth for several years.

        Apples "hobby" products (Apple TV,/Apple Watch/iPod) make upwards of 2-3 times what the Surface makes annually.

        One last comparison: Windows Phone brought in roughly $8 billion in sales revenue in 2015 - back when it was considered (rightly) a dying product being stubbornly kept on life support. Now two years later its dead, Jim.


        Tell me again how $3.5 billion in revenue ($400 million less than it brought in 2105) (a likely mere fraction of which is profit) can be a good thing?


        The Surface has brought Microsoft praise for their designs (which is well deserved), but has very few customers, non-existent market share by any sensible metric, and has done absolutely nothing for Microsofts bottom line.

        In other words, like every other hardware venture Microsoft ever gets in - the sole exception being the Xbox.

  24. Avatar

    Waethorn

    "Buyers who stick with Surface tend to really enjoy the products."


    Huh? As opposed to what? The people that dropped Surface because of the poor reliability? Of all of the people I know that bought a Surface Pro 1 or 2, NONE are still using them, nor have any of them stayed with Surface.

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