Microsoft says the idea it will kill its Surface product line is a 'tabloid rumor'

To the guy that heads up Microsoft's Surface products, the idea that the company is going to kill off its line of computers and tablets is laughable.

"It's so far from the truth," Panos Panay, Microsoft's corporate vice president of devices, said on Monday, calling the notion the "tabloid rumor of the week."

Panay was responding to a discussion last week by a panel of PC industry executives about the future of Microsoft's hardware business. The executives, which included representatives from Dell and Lenovo, predicted the company would kill its Surface line by 2019, according to The Register.

"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," said Gianfranco Lanci, Lenovo's chief operating officer, according to the report.

Essentially, the executives argued that Microsoft would eventually tire of being in the low-margin hardware business, especially when it doesn't command much market share and sales are declining. Microsoft's Surface business revenue fell 2% in the company's most recent quarter from the same period a year earlier. In the previous quarter, Surface sales plunged 26% from the year-earlier period.

But Microsoft isn't running for the exits, Panay said. Instead, the company is in hardware for the long haul, and Surface isn't going anywhere, he said.

In part that's because for Microsoft the Surface business is more important than selling hardware, he said. Improvements Microsoft has made to the Surface devices have often led to similar improvements across the entire PC market, he said. For example, as Microsoft has improved the speed and accuracy of its stylus, Surface Pen, that code has made its way back into Windows 10, improving the experience of using a stylus on PCs from other manufacturers.

And Microsoft has a history of focusing on the long-term with its Surface business, rather than short-term setbacks, however costly. In 2013, the company took a $900 million charge to account for unsold inventory of its Surface RT tablet. Microsoft's response to the device's flop: It just made them try harder, Panay said.

"There was no loss of confidence," he said. "There was a real belief in how we can change the world."

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