Windows Phone Redux

Microsoft just reported earnings for the 2022 fiscal year, generating more revenue than approximately three-quarters of the countries in the world, the vast majority from: cloud, software, services, gaming. And then there is Surface, the last vestige of corporate Apple envy.

Surface Revenue

Surface division started out failing to make an iPad competitor, transitioned to another reason to fire Steve Ballmer, and most recently was reorganized as a trojan horse for the “digital moleskin” fever dream of Panos Panay. The Surface brand now includes the following exhausting list of products, almost none of which matter.

  • Surface
  • Surface Pro
  • Surface Duo
  • Surface Laptop SE
  • Surface Laptop Go
  • Surface Laptop
  • Surface Laptop Studio
  • Surface Studio
  • Surface Hub
  • Surface Headphones
  • Surface Earbuds

Of the $6.68 billion in revenue earned for FY22, and $1.49 billion for Q4, almost all of it was spent on Surface Pro tablets and Surface Laptops. Scrape $680 million for products no one buys, and figure an ASP of $1,000 split evenly between tablets and laptops and you get 3 million of each. In comparison, Apple sells around 65 million tablets and 25 million laptops. You could goose the numbers by adding more low-end tablets and laptops at an ASP of $500, so maybe 4 million each, but it’s still just pretty sad for supposed flagship devices. We’ve seen this mediocre story this before.

Like Windows Phone, Microsoft is either unwilling or unable to devote the resources to make Surface a measurable success in terms of volume or profits. Surface exists on sufferance of Nadella and interest of Panay, and either changing means doom.

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