Microsoft Exec Debunks OEM Rumors About Killing Off Surface (Oct 10, 2017)
A bizarre story did the rounds last week based on executives from several Windows OEMs saying that Microsoft would likely kill off its Surface line at some point in the near future. It should have been obvious on the face of it that (a) these OEMs compete directly with Surface and likely rather resent the way it’s quickly gained lots of positive attention in the premium segment, and (b) Microsoft has just this year expanded and updated the Surface line, an odd thing to do if it’s thinking of killing it off. And yet the rumors persisted to the point where Panos Panay, who runs hardware at Microsoft, felt the need to specifically address and debunk them. One of the reasons the OEM execs gave for Microsoft’s likely exit from the space was poor margin performance, but of course low margins characterize almost the entire consumer electronics industry and PC vendors are no exception. Microsoft hasn’t commented on Surface margins for a while now, but did say on an earnings call in January this year that its Surface gross margin dollars had grown, and it had said previously that the business was gross margin profitable. Now, none of that it to say that this is a scale business or that it’s an enormous contributor to Microsoft’s business overall – it’s just 5% of revenue and likely a tiny fraction of profits – but it’s clearly strategically important to Microsoft and performing well enough financially to be worth the continued investment.
via Business Insider
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