Last week, execs from a market analysis firm and some of Microsoft's closest OEM partners got together at a conference and suggested Microsoft may be killing the crown jewel of its first-party hardware business, the Surface line. In response, the man in charge of hardware at the company could not be more dismissive.
At that conference, Lenovo COO Gianfranco Lanci suggested Microsoft may drop the entire business in just a couple of years, before the turn of the decade. He explained his reasoning as follows:
“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. 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.”
Corporate Vice President of Devices at Microsoft, Panos Panay, was so repulsed by the idea that he referred to such an event as being "so far from the truth" that it may as well be "tabloid rumor of the week."
For one, Panay explains that the Surface line is important to Microsoft's success, arguing that changes made in the creation of Surface hardware, and the feedback received from the engineers working on it affect the company's products at large. He referred to the many improvements Microsoft has made to inking in Windows as being a result of their work on Surface products, and that these changes have then affected not only Microsoft's own OS but also subsequent devices released by the company's OEM partners.
He even referred to the almost billion dollar write-off during the infancy of the Surface line as just another reason to try even harder. "There was no loss of confidence. There was a real belief in how we can change the world," he said.
Though the Microsoft faithful may indeed be rather fretful about the future of Surface following the company's recent string of closures and Joe Belfiore's recent comments on Windows Mobile but it is important to remember that Surface is a far larger, and far more iconic, business for Microsoft. It's also not experiencing massive drops in revenue like the company's phone business experienced.
While Microsoft did make statements indicating their support for Windows Mobile two years before they finally came out and eulogised the platform, Surface and Windows Mobile are, financially and otherwise, different beasts altogether. For now, Panos' description of events does seem to be the most accurate outline of the company's future plans.