Earlier this week, Microsoft dropped a surprise by announcing it will end its Groove Music Pass streaming service. This led to the usual criticisms of Microsoft killing off services. However, some industry watchers believe the company may target its popular Surface brand next.
Canalys CEO Steve Brazier says Microsoft's chief, Satya Nadella, will soon want to sunset Surface. While that seems very unlikely to us, Brazier says Nadella is a “software guy, a cloud guy”. He also says of the products, “…overall they are not making money. It doesn't make sense for them to be in this business.”
Brazier was not alone in his belief, but before that let's look at the two points he raises. There is no doubting that Nadella is a “software guy” and has steered Microsoft on a “cloud first” strategy. It has been a winning formula too, as the company has reignited its fortunes under the CEO.
Surface sales are not exactly stellar either. They're also not bad, so it depends on how Microsoft sees the brand. I have often argued that Microsoft builds Surface products as reference machines. The company wants OEMs to see that Windows-based products can be powerful and premium. It is a combination Apple has often excelled at.
Microsoft's ideal has certainly worked as we have seen OEMs up their game in terms of PC and hybrid design and performance. There are some who argue Surface is simply all about sales, but I find that a tough sell.
Sure, a device that sells well will be welcome and Surface's have done decent business in recent years. But it seems illogical for Microsoft to be going after OEMs in a hardware battle. The company needs third-party manufacturers to prop up its services, like Office, Azure, and Windows.
So yes, Surface is probably designed as Microsoft's ideal products for its services, much like Google's own stock Android smartphones. OEMs, while spurred into action by Surface, have not enjoyed having Microsoft directly competing with them.
Interestingly, Dell and Lenovo executives agreed with Brazier's prediction for the brand. Lenovo's COO Gianfranco Lanci says Microsoft will nix Surface before 2019, while Dell's Marius Hass says the company will “probably slow it down a bit.”
Nadella has shown little hesitance in shutting down underperforming divisions. Lumia was dropped rapidly as decline kicked in, while Groove is the latest to pay for not growing. However, it has always seemed that Microsoft's ambitions for Surface were different.
The company has been ramping up its hardware output if anything, so there is still that feeling that Nadella could be willing to ride out losses or stagnant sales. Perhaps Surface will become like Xbox. Barely a year passes without rumors of Microsoft looking to offload its gaming division, but the big sale never arrives.
As a fan (accepting some glaring flaws) of Surface, it would be nice for its stick around.