Panos Panay left Microsoft due to big cutbacks on more 'experimental' Surface devices

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Microsoft will only focus on its most popular Surface devices going forward.

Panos Panay and Surface Neo
Panos Panay (right) talking about the unreleased Microsoft Surface Neo. (Image credit: Future)

What you need to know

  • Earlier this year, Microsoft announced that it was reducing its devices portfolio amidst layoffs and cutbacks.
  • Now, a new report details the kind of hardware Microsoft has cut from the lineup.
  • Unsurprisingly, these cutbacks are a primary reason for Panos Panay's abrupt departure. 

2023 has been a big year for Microsoft. There's been some serious investment and growth in AI while also cutting back and laying off thousands of people. It began earlier this year with the announcement that 10,000 employees were being let go.

Around the same time, Microsoft announced that it was reducing its device portfolio and mentioned that it would be scrapping the "Microsoft" branded accessories in favor of premium Surface ones. But that wasn't the whole story. The move to reduce its device portfolio has also directly affected the Surface hardware lineup.

A new report from Business Insider details that much of Microsoft's more niche or experimental Surface hardware, such as the Surface Headphones, has been scrapped. A second-generation pair of Headphones were due to ship this year, but now won't be. 

My own sources say that other experimental Surface hardware, such as the Surface Studio all-in-one and Surface Duo, have also been placed on the back burner, with no plans to ship a new version of either product line for the foreseeable future. 

Microsoft's ill-fated Surface Duo 2. (Image credit: Daniel Rubino)

Microsoft had planned to ship a Surface Laptop SE 2 this spring but canceled the product at the last minute. An 11-inch Surface Pro was also being considered at one point but has now been scrapped in favor of the Surface Go 4 with an Intel N200 chip.

The plan, for now, is for the Surface team to focus only on its most popular and high-profile hardware lines, the Surface Pro, Surface Laptop, Surface Laptop Go, Surface Laptop Studio, Surface Hub, and Surface Go.

Unsurprisingly, being unable to ship new niche or experimental Surface hardware is a crucial reason why Panos Panay left so abruptly. Panay has consistently pushed for more unique hardware ideas, but it sounds like Microsoft is only interested in the product designs that make the most money.

It's possible that in the future, Microsoft will return to shipping more experimental form factors. I know the company was working on a foldable phone and tablet, as well as a Surface monitor and mini desktop. Maybe these devices will still ship in the end, but these experimental devices are not Microsoft's priority for now. 

In the immediate future, Microsoft will unveil a refreshed Surface Laptop Studio 2, Surface Laptop Go 3, and Surface Go 4 during its special event in New York City today.

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Zac Bowden
Zac Bowden
Senior Editor

Zac Bowden is a Senior Editor at Windows Central. Bringing you exclusive coverage into the world of Windows on PCs, tablets, phones, and more. Also an avid collector of rare Microsoft prototype devices! Keep in touch on Twitter and Threads

17 Comments Comment from the forums
  • Iamdumbguy
    What's more experimental about the Surface Studio than the Surface Pro? Or the Surface Laptop Studio? The only experimental thing about the Surface line is its lack of support and above-market pricing.
    Reply
  • mech1164
    More like, Satya: Hey Panny can I talk to you? Panos: Sure what ya need? Satya: We're going to focus more on AI so we'll have to pull back in other areas. Panos: I see where's that? Satya: Your division, we're only doing the what has been selling. Oh and we're cutting staff and funding. That won't be a problem Will it? Panos: Well if it has to be we'll make it work. Satya: Thanks i knew I could count on you.

    Panos leaves grabs his Android phone. "Hey Jeff, remember when you asked about when I'd be available. About a week from now. Ok great I'll be in your office in the morning."

    That's basically what probably happened.

    Satya has had a hard on to eliminate all the hardware he can. First Windows Mobile, the the front facing Stores. Now the Hardware division itself gets gutted and the reduction in what hardware they make. Any small wonder when Panos got wind of what was happening he bolted
    Iamdumbguy said:
    What's more experimental about the Surface Studio than the Surface Pro? Or the Surface Laptop Studio? The only experimental thing about the Surface line is its lack of support and above-market pricing.
    Reply
  • naddy69
    "...but it sounds like Microsoft is only interested in the product designs that make the most money."

    Well of course. That's how companies stay in business.

    If your product/department/whatever is losing money, then you can expect your product/department/whatever is going to be cut back.

    WTH was Microsoft doing selling headphones anyway? One more time: MS is not a consumer products company. They never have been. They never will be.

    Nothing wrong with that. Well-managed companies focus on their strengths. That's why Apple does not sell Oracle servers. Oracle does not sell phones. IBM does not sell headphones. Cisco does not have a music streaming service. ADP does not sell watches.

    I would not be surprised to see the entire Surface line gone in 5 years. PC hardware is a shrinking market with low margins. Being a niche player in a shrinking market is not a good long-term plan.
    Reply
  • Jcmg62
    I thought the whole point behind the surface line was to push boundaries and experiment with new windows form factors.

    Didn't they do a whole song and dance about how surface wasn't intended to erode market share or compete with hardware partners, but was actually supposed to be a guiding light for partners to copy and develop their own unique hardware?
    Reply
  • Kaymd
    naddy69 said:
    "...but it sounds like Microsoft is only interested in the product designs that make the most money."

    Well of course. That's how companies stay in business.

    If your product/department/whatever is losing money, then you can expect your product/department/whatever is going to be cut back.

    WTH was Microsoft doing selling headphones anyway? One more time: MS is not a consumer products company. They never have been. They never will be.

    Nothing wrong with that. Well-managed companies focus on their strengths. That's why Apple does not sell Oracle servers. Oracle does not sell phones. IBM does not sell headphones. Cisco does not have a music streaming service. ADP does not sell watches.

    I would not be surprised to see the entire Surface line gone in 5 years. PC hardware is a shrinking market with low margins. Being a niche player in a shrinking market is not a good long-term plan.
    But it can be argued that Surface was responsible for revitalizing the PC market.
    Before Surface, most mainstream notebooks PCs were plastic garbage. Only Macs had any real 'premium' offerings. Now, Dell, HP, Lenovo, ASUS etc. have commonplace 'premium' products.

    It's as if Surface injected some newfound pride into being a PC OEM. No self-respecting OEM could let a 'software' company i.e. Microsoft outdo the products of the supposedly more experienced hardware companies.
    Today, very many Windows notebooks are as premium as any MacBook (I'd even argue better in many ways).

    Add to the pen-enabled PC tablets, Windows on ARM etc. Things we all take for granted today. The impact of Surface cannot be overstated.

    If Surface vanishes, we are left at the mercy of the OEMs and will quickly revert to the dark ages of the cheap plastic notebooks lol!
    Reply
  • xenred
    Jcmg62 said:
    I thought the whole point behind the surface line was to push boundaries and experiment with new windows form factors.

    Didn't they do a whole song and dance about how surface wasn't intended to erode market share or compete with hardware partners, but was actually supposed to be a guiding light for partners to copy and develop their own unique hardware?
    Well that's almost gone for a while. Ever since they release Surface Laptop with pretty much no major innovation as to why get it compared to other well known laptop brands shown Surface becoming another Wimdows OEM. Though they eventually release Surface Duo, the cancelled announced Surface Neo and Surface Laptop Studio shows they can experiment, but it's clear that the first two is gutted. Surface Laptop Studio isn't as revolutionary as Surface Book either, but at least it also solves some limitations fro Surface Book design, even though I much prefer the former due to ability to be full tablet only when needed.

    Surface Studio was nice as well, but due to high cost, it didn't shake the market and feels like refused to make cheaper version of it.
    Reply
  • Iamdumbguy
    Jcmg62 said:
    I thought the whole point behind the surface line was to push boundaries and experiment with new windows form factors.

    Didn't they do a whole song and dance about how surface wasn't intended to erode market share or compete with hardware partners, but was actually supposed to be a guiding light for partners to copy and develop their own unique hardware?
    The problem with experimental hardware is that its pointless without software and that's just out of the question.
    Reply
  • naddy69
    "The problem with experimental hardware is that its pointless without software and that's just out of the question."

    Very good point. How "experimental" can the hardware get when all you have is mouse/keyboard Windows? You need an 11" screen or so as a minimum. No matter how many times/directions the keyboard folds over/around/behind the screen. Still dealing with desktop Windows.

    MS still has no mobile OS. Windows has not had a real touch UI since Windows 8.1. Windows 10 and 11 are - at best - touch tolerant.

    Imagine running Linux on a 6 inch touch screen. Or MacOS. They are not designed for it, and neither are the apps. Windows is in the same boat.

    That's why we have Android. That's why we have iOS/iPadOS. These are successful mobile/touch Operating Systems. Windows is not and never will be.
    Reply
  • Christian Jesperson
    Panos was one of the visioneers. Now it's just bottom line focused. AZURE, AI, XBOX, 365 / WINDOWS and that's about it. This is what happens when you have accountants running the company.

    One day, Microsoft will be run by an AI accountant, mark my words.
    Reply
  • Christian Jesperson
    xenred said:
    Well that's almost gone for a while. Ever since they release Surface Laptop with pretty much no major innovation as to why get it compared to other well known laptop brands shown Surface becoming another Wimdows OEM. Though they eventually release Surface Duo, the cancelled announced Surface Neo and Surface Laptop Studio shows they can experiment, but it's clear that the first two is gutted. Surface Laptop Studio isn't as revolutionary as Surface Book either, but at least it also solves some limitations fro Surface Book design, even though I much prefer the former due to ability to be full tablet only when needed.

    Surface Studio was nice as well, but due to high cost, it didn't shake the market and feels like refused to make cheaper version of it.
    I always asked for a fairly affordable Surface Studio screen (~1500 bucks or so MAX) without the PC, so I could plug in anything I build, to be able to keep it upgraded, and have something with longevity with pen input and a nice high res screen. They missed out. Microsoft really needs to listen to its users.

    Tech companies like to pat themselves on the back for their earth friendliness, but then put out products that quickly grow obsolete that are not repairable or upgradable (or if they are repairable, they want to charge you an arm and a leg for the parts / repair kit). This model needs to change. Especially in today's world. Batteries need to be easily removable, they need to be replaceable with a good supply chain. Screens too, keyboards, touchpads, etc.

    Framework and Fairphone are the only two I think leaning this way. That will be the future, not thin-ness or marginal upgrades.

    My Duo 1 battery on my second device purchased since the Duo came out didn't even make it through a year after I bought it in March of this year. Microsoft says, too bad, it's out of warranty, even though I bought it brand new in box this March from Amazon, so you can imagine how pissed I am about that. The Duo is far above other foldables in terms of multi-tasking.

    Upgraded to a Samsung Galaxy S23 Ultra because at least I know Samsung supports their devices and stands behind them, not to mention they get a lot better press.
    Reply