MICROSOFT WILL BIN its Surface laptop line-up by 2019, if remarks made by Canalys CEO Steve Brazier are to be believed.
As reported by The Register, which attended the Canalys Channels Forum, Brazier said that Microsoft CEO Satya Nadella is a "software guy, a cloud guy", hinting that the firm's bork-ridden Surface laptops and tablets are likely to go the same way as the firm's all-but-defunct smartphone division.
"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," Brazier remarked.
"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?'"
Brazier has a point. Last quarter, Microsoft's Surface revenue was down 2 per cent, and dropped a massive 26 per cent year-on-year in the previous quarter. The devices have been plagued with issues, too, which Microsoft has blamed on Intel's Skylake chips.
Passing the buck didn't stop Consumer Reports yanking its "recommended" label from the Surface line-up, though. It slammed the hardware "significantly less reliable than most other brands" after finding that one in four Surface owners were being plagued with "problems by the end of the second year of ownership."
Brazier's predictions were backed up by Gianfranco Lanci, corporate VP and COO of Lenovo, who joined the Canalys CEO on stage.
"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," he said.
"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." µ
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