Head of Microsoft hardware business Panos Panay talks Windows Phone, wearables and the future of Surface

Despite the company continuing to refresh and iterate its Surface hardware year over year and the incremental revenue increases the division sees each fiscal report, there has been some speculation from investor analysts that Microsoft is in a revolving mindset of consideration regarding the financial viability of the business.

Woman reading email on a Surface on bed

To that end, Microsoft’s chief product officer Panos Panay’s recent interview with the Independent’s Adrian Weckler may assuage some fears or concerns about the company’s hardware future for both fans and investors.

Weckler’s interview piece covers quite a bit including the contextual reference regarding Microsoft’s market cap position, annual revenue growth of the Surface hardware line and some data points highlighting the historical struggles of the company’s hardware efforts.

“And not everyone thinks it will remain a core part of Microsoft’s product roadmap, with some senior analysts still insisting that it doesn’t make sense for Microsoft to be in the hardware game.

But Microsoft is in it for the long haul, says Panay. Hardware is now “core” to what the company is and does.”

As Microsoft continues to reestablish itself as a software and services platform provider, Panay’s answer may come as a head-scratcher to some, especially those who have recently been investing in the company based on its growth in its hardware-less cloud computing product, Azure.

However, Panay offers the following rebuttal that should help explain Microsoft’s focus on hardware as a means to better develop integrating software.

“It’s not just a core part of our strategy and at the center of Microsoft, it’s also a core part of how we build products at Microsoft. It’s important that that resonates. It’s important for me to say it.

…I think if you asked me five years ago, we were still learning. We were still trying to figure out what hardware should do to bring software to life.”

In the face of Panay’s (and ostensibly the Surface division) introspection, Weckler also parlays investor trepidation about Microsoft’s hardware history by bringing up the company’s Windows Phone and the Nokia smartphone business purchase.

“Were there any lessons that the company learned from its Nokia Lumia experience in how it approaches hardware research and design now?

I think we learned quite a bit. Lumia, of course, was a challenge. We can take those product lessons and customer lessons and moved them forward. I think we have. Satya Nadella (Microsoft CEO) talks about the growth mindset, about how we can learn as fast as we can through our successes and, mainly, our failures. When you fail, you are in a true learning mode. You are in a tremendous growth phase. And this is something we take to heart.”

Windows Phone Models

With Windows Phone in the rear view and Surface on the modest track to success for the company, Weckler asked Panay about the direction the hardware division is headed as it branches out to headphones and how that plays into Microsoft’s more enterprise-focused services and messaging.

“But aren’t headphones a consumer device? Does this signal that Microsoft is now expanding beyond its work-tech remit with the Surface line?

Think about headphones as completing an experience for the way people are working.

So many people now work in cafes, trains, airplanes or in the back of a taxi. And you might switch in and out of modes because you’re seeing work and life blend. When we designed the product, that’s the way we thought about it.”

Furthermore, Microsoft dipping its toe into the ambient AI-powered headphone market is part of the company’s larger ambition to “completing experiences,” that may, at some point, have the Surface team revisiting more traditional wearable technology.

“Are we completing experiences for people at work and at home? The answer is yes. So will you see new form factors that can do that, or need to do that? The answer is absolutely. And that’s how it kind of comes together. For me, work and home equals life, whether the device is in the kitchen at home, in the home office, in your work office or on your body. They’re coming together. So yeah, you’ll see more products that focus on where our customers are going to be.”

Microsoft’s future looks rather bright as it has seemingly found itself at a rather complimentary junction where its pivot to cloud computing is paying dividends in its investor confidence year over year, as well as, the company is finally producing products that are building public cache that often competes with market leaders, such as HP, Dell, Apple, Google, and Sony.

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