Satya Nadella’s penchant for scrapping money losing products is causing many to ask which device or service is next.
While some speculate about Bing and Xbox, if you ask PC OEMs they are very clear that Microsoft’s Surface range will not make it to 2020.
Speaking at the Canalys Channels Forum Gianfranco Lanci, corporate president and chief operating officer at Lenovo was quite pessimistic.
“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.”
Gianfranco expected Microsoft to shutter the business even before 2019.
Dell chief commercial officer Marius Haas feels the Surface range has served its purpose, and that Microsoft will “probably slow it down a bit.”
He felt it was sensible to use its hardware to “demonstrate the total capability of the [software] platform” but said Microsoft had never intended to create a “broad based portfolio with a product for every form factor”.
CEO of analyst company Canalys, Steve Brazier said Microsoft CEO Satya Nadella would exit the product line because he is a “software guy, a cloud guy” and pointed to the demise of the phone device.
He added, “The Surface performance is choppy; 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.”
While there is currently no clear indication that these views reflect any actual plans by Microsoft, it does underline how much confidence has been lost in Microsoft’s willingness to stick by a product line, and reflects the view that Microsoft has become a very Wall Street-driven quarter-to-quarter profitability driven company who is unlikely to invest strategically in platforms, but instead concentrates on high-growth and quick return.
We have asked Microsoft for comment and will update the article accordingly.
A Microsoft Spokesperson gave us the following comment:
“Surface continues to drive category growth and redefine the way people create, learn and work. You’ll see us continue to innovate and create devices that offer users new and impactful experiences.”
Source: The Register