2019: The year that Microsoft quits Surface hardware Microsoft will quit its loss-making Surface hardware business by 2019, according to execs from PC manufacturers and a channel watcher. Talking at the tenth Canalys Channels Forum in Venice, Canalys CEO Steve Brazier said Microsoft CEO Satya Nadella would exit the product line because he is a “software guy, a cloud guy” and …
"are now completely screwing up, by late releasing the Xbox One X which is basically mostly expensive custom parts and high performing PC parts along with zero games that take full advantage of it."
Custom parts made in the millions become cheaper parts. And it's circa 1/3 the cost of a 6TFLOPs PC with an HD BluRay drive. Forza 7 takes full advantage of it as an obvious example, other optimised games are coming and many current games are being patched do do so.
Here is a good example of what it can do: https://www.youtube.com/watch?v=2kPSl2vyu2Y
That assumes that it will sell millions long term which is far from a given. It is priced as a bargain pc as opposed to being a console. Forza has never been a system seller on its own for Xbox in the same way GT has for Sony and making a driving game pretty (4k, 60fps) ain't exactly difficult because it is more or less on rails. Other exclusives like Sea of Thieves and the rest are nice but not system sellers. All the games for it will run happily on an Xbox One S, so they are limiting the market to people with 4K TVs who are happy to pay £449 for the privilege of a slightly higher resolution assuming devs take full advantage of this and reproduce the textures and geometry to take advantage of the extra power. I've cancelled my orders for the Scorpio Edition and the regular Xbox X until I see what the reception is going to be like especially amongst developers and not just rabid Xbox fans.
XBOX doesn't compete with the channel 'partners' in the way that PCs and tablets do.
So yes, XBOX will be safe (or at least be allowed to live or die on it's own merit).
Surface quickly - and imho rightly - became the preferred Windows device, which annoys the other Windows PC vendors. It was a rude shock to them, and they had to lift their game, or suffer.
Now that Dell, HP & Lenovo are all making excellent hardware, perhaps Surface isn't needed anymore. It's achieved what it was meant to achieve.
Personally, I reckon Surface will be retained for at least one or two more generations, because MS need to get the ARM devices into the market. A Surface tablet running Windows-on-ARM? Here, take my money.
But after that?
Xbox is surely the prime contender for the chop, it's never made money, racked up huge losses in the tens of billions and current models have flopped so badly, Microsoft refuse to mention sale numbers and even have them removed from quarterly earnings reports... Essentially telling the world even the best estimates from third parties of how badly it's doing are way off the mark to the true floppage...
"Xbox is surely the prime contender for the chop, it's never made money, racked up huge losses in the tens of billions and current models have flopped so badly"
Not the case - Xbox has been profitable for many years now, and selling over 36 million units of the Xbox One isn't exactly a flop...
Xbox one isn't profitable, Microsoft have armies of accountants that can play games with numbers to send whatever message they want to Investors. The "reserved" 2.1bn dollars in one quarter for RROD and made a massive loss that quarter, but then claimed 100k profit the following quarter. Its utter nonsense. They don't factor in r&d costs and other costs when proclaim a division is profitable.
It's safe to say, when you look at the big raw picture, Xbox never made Microsoft a dime, just rented the books, they are just masters of covering that up to keep shareholder happy. I want to know how that fits i with SARBOX
"Xbox one isn't profitable, Microsoft have armies of accountants that can play games with numbers to send whatever message they want to Investors. "
Microsoft would be breaking many laws in various countries including ones potentially resulting in prison time in the US if they deliberately misled investors. Therefore as Microsoft have said Xbox is profitable for many years now it is rather unlikely to be a lie.
"Blimey, what the hell are Microsoft going to sell in their new store. Is even Xbox safe?"
If it's profitable then hopefully the answer will be yes. At the start of this year, Canonical employed an external consultant and in his report he basically said concentrate on doing the stuff that makes money and drop the stuff that doesn't make money otherwise you will go bust.
It sounds like Microsoft's in the process of doing something similar.
But it pretty much has flopped, so he isn't really that far off the mark, last time I looked, Sony were selling 4 PS4 consoles for ever 1 Xbox, and that will only accelerate, as friends buy the same console as all thier friends have, and development focuses towards the faster and more popular PlayStation hardware
"But it pretty much has flopped"
Even if it had flopped which I strongly contest.... What I was referring to was the childish renaming "xFlopOne", its in the same vein as Crapple, Microsuck, micro$oft and the more recent "Slurp" which seems to have missed the point altogether by not even attempting to be a play on the original product or company.
So regardless of the success or not of the product, stop with the ridiculous renaming of products, it was funny once*.. its not now.
* that one time it was funny was when it was spelled "flops" so it at least SOUNDED like box.
The original Surface was basically their attempt to copy the iPad, and it was a miserable failure. No one wanted tablets from Microsoft. So they did an about face with the brand and turned it into an ultrabook on steroids. While it was still "technically" a tablet, it was sold for and purchased as a laptop in almost all cases.
At first the Surface Pro was a premium line priced in Macbook Pro territory, so margins wouldn't have been an issue. Unfortunately some dim bulb at Microsoft decided they needed to move it downmarket, so now you see low end versions for as little as $799. Given the cost of making it so thin and light, there can't be much if any profit at that price. Sure, they probably get a bit more market share that way, but less overall profit - many low end buyers would have bought a better spec'ed version at twice the price if the low end version didn't exist.
Yet another self inflicted wound.
"Unfortunately some dim bulb at Microsoft decided they needed to move it downmarket, so now you see low end versions for as little as $799."
You can get good kit at that price. My Lenovo Yoga for instance. Does everything I need it to. Not sure what I would need to spend three times that for.
My point was that Microsoft was successful at first selling Surface Pro at only premium prices. When they offered a lower priced version, a lot of people who would have bought the premium priced version bought the cheaper one - the main difference being a lower spec CPU and less memory, which for most doesn't matter a bit since they don't have demanding needs. After all, if they needed a powerful laptop they wouldn't be buying a convertible at all, but a full fledged laptop that came in a version with a quad core CPU.
Just because there were cheaper alternatives like the Yoga doesn't mean Microsoft needed to compete with them. You weren't willing to spend 3x as much, but many were as evidenced by the fact Microsoft was selling a fair few of them at 3x the price - until they offered a lower priced version of their own because they wanted to chase people like you who weren't willing to pay as much. Though airlines make a good effort of it, it is really difficult to charge everyone the most they're willing to spend, you either need to charge a lot and lose sales to people who won't pay that much (the Apple model) or offer a range of models and know you'll sell a certain amount of lower end products to people who would have paid you for the higher end product if that was their only choice.
"The original Surface was basically their attempt to copy the iPad, and it was a miserable failure. "
Not really - it's a rather different device - and among many other reasons, it was an attempt to head off the Ipad Pro - which has had terrible sales - far more companies are going for the Surface - so it seems they have largely succeeded!
It doesn't come with a "Wacom Stylus" it's made by N Trig, and also it is sold separately along with the Keyboard. The pen for Surface has come on quite a bit since the one released with Surface pro 3, but is not as good as a proper Wacom made digitizer or the Apple pencil + iPad Pro for drawing in my experience, owning both of the devices in question. For some reason, my usage of the iPad Pro with Apple Pencil and it's zillions of Adobe apps, Including Photoshop Sketch (which I couldn't live without) works better than the Surface running full Photoshop, possibly because it's designed for a tablet and is better to just sketch something out quickly and easily. Adobe don't seem to make their apps like this for Windows, you're just expected to run the full Windows version on the tiny Surface's screen and go slowly blind. Therefore I wouldn't exactly say this makes the iPad Pro look anaemic, it's closer to being the right tool for the job for many people's workflows and everything is touch optimized from the ground up, not as an afterthought. Windows 10's touch support seems worse than 8 as MS know they can't jettison it totally but they know that very few people use it.
@ robin thakur 1
Thanks for the heads up. Clearly the reviews I was reading were incorrect. I take it then that the stylus that comes with the iPad Pro does have the eraser on the end like my Wacom stylus then. I'm not the kind of artist who works with his media out in the open air. I use a camera rather than a sketchbook. My artwork is made indoors using Corel Painter and a 27 inch Dell monitor my son gave me, or pen and paper.
If high end hardware is considered "low margin" how is Apple so wealthy?
Microsoft always take several versions to get their products working right. Having invested so much in Surface R&D, once the design is mature, it takes less investment to upgrade the silicon each generation. Sacrificing the Surface before it's time could end in closing their (physical) stores.
So if they want to attract more customers in-store they could diversify into:
- Hololens experiences. A different experience every month.
- Windows bootable USB sticks (who has a Windows USB stick ready when their PC gets corrupted or infected? Read-only or physically write-locked by default would safeguard against infection)
- Cortana AI assistants, perhaps for the workplace / public environments rather than the home? They could replace their shop assistants with Cortana kiosks.
- Copies of "Hit Refresh". What better way to get people in store if you couldn't buy it elsewhere?
Apple has always primarily been a hardware company. Microsoft hasn't, and doesn't really want to be. With the exception of the Xbox, they generally create hardware in order to showcase a certain software platform they want to sell, then abandon the hardware once either others have taken up the platform, or it becomes obvious others won't. They have a short-term mentality when it comes to hardware.
Apple are so wealthy because they own the supply chain from start to finish. Bought in components are off the shelf and easy to source the specialised bits are made in house or by companies who are so tied in to apple that not performing would sound the death knell. The lock in on apple products also heavily contributes to this - not being able to go where you want when you want for software without invalidating warranty means they have a monopoly - even if the people don't purchase an apple app the major players are paying to be in the store in the first place.
Add into that the mark-up is huuuugggeeee but you have the fanbois who will happily pay a premium for the badge and not because its something they need - you end up with one happy fruity company.
I'm just glad to see that Apple's days of trying to dictate to consumers what they will have rather than listen to what they want have backfired and some people are jumping ship.
"The lock in on apple products also heavily contributes to this - not being able to go where you want when you want for software without invalidating warranty means they have a monopoly"
errm... you _can_ 'go where you want' to get software for Macs. You have somewhat more of a point for iOS devices, but jailbreaking, installing, and then unjailbreaking is easy enough. https://en.wikipedia.org/wiki/IOS_jailbreaking
"If high end hardware is considered "low margin" how is Apple so wealthy?"
Well... The first problem with your question is the assumption that apple sell high end hardware...
Im not saying they are bad.. its just this years iPhone is last years Galaxy with a new jacket.
Also.. Sweatshops help alot... but MS and others will also be using these.
Umm...have you seen the benchmarks for the iPhone 8/X CPU/GPU versus Android? An iPhone 7 still beats this year's Androids in any test that matters and the 8/X proprietary chipset simply leaves the Note 8, the S8 and any other Android you care to name in the dust. The software even exists in the App Store to use all that power! How novel. Samsung do make nice screens, and storage I'll give them that, the rest (Bixby, plastic pencil, Iris recognition, exploding batteries, slow processors) they can keep.
"- Windows bootable USB sticks (who has a Windows USB stick ready when their PC gets corrupted or infected? Read-only or physically write-locked by default would safeguard against infection)"
You can easily make your own:
http://go.microsoft.com/fwlink/?LinkId=691209
With WIndows 10 you would normally have a recovery partition anyway, and a completely reset or a refreshed install takes only a few minutes.
Given that MS make their own servers for Azure and their own networking hardware I'm going to go out on a limb and say they have great relationships with hardware manufacturers, so Surface is unlikely to be a huge burden. Internally there are 200k devices purchased every couple of years and there are lots of customers starting to ramp up Surface estates.
Surface matches well with the MS mission statement too, so I don't think it'll be canned any time soon. My Surface Book is genuinely the best laptop I've had, but it is ugly, heavy and crazy expensive!
They aren't making money on the Surface line because they don't have a whole ecosystem for end users. End users want a seamless transition from desktop to tablet to phone. Microsoft doesn't have a phone or anything that remotely works as long as a tablet as Apple or Android.
This is the end of the road for Microsoft in the end user arena. Buy Apple stock. They are the only game in town with an almost seamless transition from desktop to tablet to phone.
"They aren't making money on the Surface line because they don't have a whole ecosystem for end users. End users want a seamless transition from desktop to tablet to phone. Microsoft doesn't have a phone or anything that remotely works as long as a tablet as Apple or Android."
What? Que? Theres so much wrong with that its untrue.
Do Apple have a thing that works seamlessly from my phone (Android) to my desktop (Win 7) to my laptop (Win 10). No.
Do Apple make a laptop that is also a tablet? No. Does my laptop double as a tablet? Yes.
Can I use all my applications on all my devices? Yes. Could I use my applications on Apple devices if I wanted to? Yes.
Could I use Apple applications seamlessly on nonApple devices? No.
Microsoft doesn’t need to make a profit on Surface for it to be a success. Microsoft’s future (profits) is in the Cloud, but Azure is difficult to market that promote the Microsoft brand (to Joe consumer).
To maintain mindshare Microsoft needs something more flashy for their commercials than Azure. That’s the Xbox, VR, and the Surface products. Microsoft probably doesn’t care all that much if you buy a Surface after seeing the commercial. What’s important is people will research it, and think about buying products with Microsoft OS inside (after doing comparisons). It’s about maintaining the ecosystem that’s important.
The way Microsoft prices Surface is obviously it’s overpriced to not harm their OEM partners. I bet the OEMs benefit more from the Surface “competition” than Microsoft does...
Another way to see it is that Surface's goal was to give the OEMs a solid kick in the behinds, and wake them up from all the terrible, terrible hardware they were making.
Just look at screen and storage.
As apple was coming out with retina displays and ssd storage in their laptops, it was still considered a premium, high-end, "costs 100s of dollars more" feature to get an 1920x1080 display from Dell, HP and the like: they were very comfortable still peddling those 1366x768 pieces of junk in overweight laptops with storage that felt slower than my old 20 Mb RLL drives from the 1980s.
The current surface line-up clearly has those heat / etc. issues but calling them iPad wannabees is ridiculous.
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