Canalys CEO Steve Brazier is predicting that Microsoft will drop its Surface business by the end of 2019.
Talking to the assembled throngs at the EMEA Canalys Channels Forum event in Venice, Brazier said Vole is undergoing a “capital expenditure challenge” under CEO Satya Nadella and the Surface project will pay the price.
Brazier said that Nadella was a software and cloud guy who has already allowed Microsoft’s mobile phone business to decline. The Surface’s performance was choppy – it has had good quarters and bad quarters but overall it is not making money.
He thinks it made no sense for Microsoft to be in this business and when the capital expenditure challenge that Satya Nadella has a lot of cost cutting to do, and Surface will be the first target.
Product sales fell for Microsoft in Q2 by 1.5 percent to £9.7 billion while Surface sales dipped two per cent having previously plummeted by 26 percent in the previous quarter.
The general feeling is that Vole is making a lot of money on the cloud and enterprise and on Windows, losing cash on devices and I see no reason why they would want to continue with the Surface.
Brazier also predicted that this quarter will prove the highest growth quarter for the western European tech industry for 10 years.
The CEO forecasted that 50 percent of cloud sales will go through two-tier distribution by the end of 2019 and also claimed that channel partners will grow by five per cent per annum over the next three years. Lastly, hardware sales will account for at least 50 per cent of revenues for at least 90 percent of partners by 2020, according to Brazier.
“Hardware is not dead. Hardware will be half of your revenues through to 2020. Do not listen to your investors telling you to get out of hardware and into services. There is no evidence to support that at all”, he said.
