Microsoft Surface range are selling below expectation, and maybe that's a good thing

Last quarter Microsoft’s Surface revenue was down 26% YoY, and while this would appear to be a predictable consequence of Microsoft’s delayed delivery of an updated Surface range, it appears Microsoft expected sales to be better.

Digitimes reports that Microsoft Surface ODM Pegatron Technology has been seeing reduced orders from Microsoft recently, a consequence apparently of competition from other OEMs.

They write:

Since demand for Microsoft’s Surface products has been seriously undermined by other first-tier vendors’ similar devices, the software giant has been conservative about placing its orders, which have been much lower than than Pegatron’s original expectations, said the sources.

Digitimes notes that Microsoft expects the Surface Laptop to boost Microsoft’s revenues, but only in later quarters.

In some ways, reduced Surface sales should be good news for Microsoft, as it indicates their OEM partners have responded appropriately to their prompt to up their game, and are now producing stylish, powerful and productive devices that can stand shoulder to shoulder with Microsoft’s best.

On the other hand, with the Surface range close to a billion dollar business I am sure those who work there would prefer a healthy business with steady employment. Today’s Microsoft is much less likely to keep a loss-making division around simply for strategic reasons, and some may say the reason the Surface range was created is no longer applicable.

Either way, increased competition is always a good thing, and should mean either Microsoft’s Surface range will get cheaper,  better or more widely distributed, all of which would be good news.