This week Microsoft announced that Panos Panay, Microsoft’s Chief Product officer, will be leaving the company. Rumors are going around that Panay is going to Amazon to lead its hardware effort (which needs help). Panos Panay was the primary mover for Microsoft Surface, its biggest cheerleader, and the equivalent of Microsoft’s Steve Jobs. But Surface was backed by Steve Ballmer, Microsoft’s prior CEO, and Satya Nadella is the father of Azure and far more wedded to that solution set than either Surface or Windows, both of which get a fraction of the support they once got under Ballmer or Gates.
Let’s talk about Panos Panay’s departure this week and what it means for Surface and Windows.
The Surface line of products was created at a time when Microsoft was still focused on competing with Apple, and it was designed to provide an Apple-like experience on Windows. I believe that, had Microsoft made the same commitment to Surface it made to Xbox, it would have given Apple a run for the money. However, having been burned on smartphones once and with all eyes on the financial performance of Microsoft, even under Ballmer this effort was underfunded, and it has languished even more under Nadella who never seemed to give the platform much support.
While the hardware was generally rated highly, the initial focus was to create a better PC alternative than the iPad, and Microsoft did that for the most part. But in the years following the launch, the interest in tablets as PCs dropped off a cliff. Apple stopped marketing that eventuality because it wanted Apple customers to buy both a tablet and a PC, not merge the classes.
Over time, it has become clear that Surface just does not fill a need for Microsoft anymore. It lacks a hard connection to Azure; it upsets the other PC OEMs (who do not want to compete with Microsoft); and it has never become anything but a minor annoyance to Apple.
Panay’s departure means that Surface loses its most powerful supporter and, given the platform has not been strategic for nearly a decade, I expect Surface will be discontinued, sold or spun out eventually.
The expectation is that Panay will be replaced by Yusuf Mehdi. Mehdi is old school Windows and may end up doing a better job with Windows than Panay did because of that history and focus. Windows has also been underfunded and undermarketed of late but not to the extreme that Surface has, and Windows should still be strategic as the primary client for Azure. However, for the last several years, Microsoft hasn’t really focused on Windows, so it remains at risk of becoming the next Internet Explorer due to that lack of focus and funding for the platform.
I expect Mehdi will work to reverse that trend and improve customer satisfaction with Windows once he takes over. Since he comes out of marketing, he will be motivated to reverse the trend that reduced marketing support over time to better assure the success of that platform. I have known Mehdi to be talented and focused, so his move to Windows leadership should be positive for that platform. Just how positive he can be will depend on his success in restoring Windows support to a more strategic level than it now is.
Panay at Amazon
Amazon’s hardware business has been a hot mess for some time. There has been no real consistency in product design or execution on products that otherwise were well built but underperforming, given their potential value, in the market. This should be an ideal role for Panos Panay, as he is more a hardware executive at heart, and his influence should improve the consistency between hardware products, as well as up the innovation so the products are more interesting. He has an eye for design, which suggests they will be more attractive and financially successful as well.
Where Panay was somewhat wasted at Microsoft, he is likely to find Amazon a far more supportive environment for his hardware creativity, so I can hardly wait to see what his new team comes up with there. He has studied Apple closely and should be able to deliver an Apple-like experience with Apple hardware on a budget. This could make things interesting in the consumer electronics market.
Since Microsoft is a software company with little interest in hardware, Surface was always kind of an odd duck there and so was Panos Panay, the father of Surface. With Panay moving to Amazon’s hardware group, Microsoft can better focus on Windows under Yusuf Mehdi who is more tightly tied historically to Windows than Panay was, and Panay is well positioned to help Amazon turn its hardware into a more powerful solution. This move makes both Microsoft and Amazon potentially stronger, but it reduces the support for Surface inside Microsoft, suggesting it will likely be discontinued, which, given it is not strategic anymore, would remove a distraction that Microsoft does not need and the PC OEMs do not want.