Microsoft will quit its Surface hardware business in the coming years. This is claimed by an analyst firm and a senior executive at Lenovo. Microsoft Surface is a versatile laptop with advanced features and innovative styling, that distinguishes itself from a tablet device.
Canalys Channels Forum CEO Steve Brazier said that Satya Nadella, CEO Microsoft, will exit the surface product line because “He is a software guy, a cloud guy” and pointed out the sad demise of the smartphone line.
He further added that Microsoft Surface performance is volatile in terms of turnover. There are good quarters and bad quarters, overall they’re losing money. It doesn’t seem very feasible for them to stay in this business.
Brazier also claimed that Microsoft needs to do a lot of cost cutting, as profit margins in hardware business are thin and when they’ll try to chop expense, Surface will be their first target.
Microsoft Surface had a bumpy start in its first year due to glitches and other issues, MS ended up writing down $900m worth of stock. Their involvement in PC OEMs have always appeared to be a point of concern because they need to be very careful on the features and consistency of the hardware.
Gianfranco Lanci, Corporate president and COO Lenovo, also believes that MS might pull the plug out on its PC hardware before 2019. He added that MS is making a lot of money on cloud, Windows and Office and losing a lot on devices.
Dell CCO, Marius Haas, agreed to the concern on Microsoft Surface and added that “MS never intended to create a broad-based portfolio with a product for every form factor.”
Microsoft Surface revenues have decreased by $20m and even last quarter’s figures don’t look appealing compared to cloud sales that increased by 11%. All of this underlines the idea that MS may focus on cloud services instead of computer hardware products.