Weakness and self-destruction: Why didn't Microsoft release a new Surface Pro?

Recently, Microsoft, which has attracted much attention in the industry, released a series of Surface products, including the new Surface Book and Surface Studio all-in-one computers. Unfortunately and puzzlingly, the rumored Surface tablet series Surface Pro 5 was not released. However, Microsoft's latest financial report shows that its Surface series revenue increased by 38% year-on-year. So the question is, with the Surface series in such a good situation and one year after the previous generation of Surface series tablets (Surface Pro 4) was launched, why didn't Microsoft release a new Surface Pro or update its tablet?

Here we might as well take a look at the performance of Microsoft Surface in the past year since the release of the Surface Pro4 tablet and Surface Book 2-in-1 notebook in October last year. According to Microsoft's financial report for the same period, Surface hardware revenue in the first fiscal quarter of fiscal year 2016 was US$672 million, lower than the US$908 million in the same period of 2015; Surface revenue in the second fiscal quarter of fiscal year 2016 was US$1.35 billion; Surface revenue in the third fiscal quarter of 2016 increased by 61%, exceeding US$1 billion for two consecutive quarters; Surface revenue in the fourth fiscal quarter of fiscal year 2016 increased by 9% year-on-year to US$965 million; in the first fiscal quarter of 2017, Surface revenue increased by 38% year-on-year to US$926 million. I wonder what the industry has seen from the performance of Microsoft's Surface series revenue in the past year up to the most recent quarter?

What we see is that, except for the two quarters in a year with revenue exceeding $1 billion, the revenue of the other two quarters is not only less than $1 billion, but also occurred in the two most recent quarters. In particular, in the latest quarter that just passed, although the year-on-year growth was 38%, which was significantly higher than the 9% year-on-year growth in revenue in the previous quarter, the absolute revenue actually dropped from $965 million to $926 million. So what is the reason why Microsoft's Surface series has not increased its absolute revenue value while its revenue has increased year-on-year? The only reason is that the market and users may choose the cheaper previous generation Surface Pro tablet. As for the revenue of more than $1 billion in two quarters, we believe that it is closely related to the release of Microsoft's first Surface Book. However, from the product definition and the statistical standards of major market research institutions, Surface Book should belong to the category of traditional notebooks and is not counted when counting tablet shipments. However, in Microsoft's own Surface product statistics, Surface Pro (a tablet) and Surface Book are combined together (revenue).

Of course, we don't know exactly how much revenue Surface Book has contributed to Microsoft's Surface series, but according to an unpublished study from 1010data disclosed by Computer World in the middle of this year, iPad has a 32.5% market share in the "tablet/laplets" market, and Surface Book has also increased by 9 percentage points (to 25%). Although there is an element of exaggeration in this, it shows that Surface Book has played an important supporting role in the Surface series in the past year. As for Surface Pro 4, although it was highly praised by the industry when it was released and was considered to be better than Apple iPad Pro, which is also a tablet computer, the sales of iPad Pro alone exceeded that of all Surface tablet computers (including Surface Pro 4 but not Surface Book) according to statistics from IDC in the quarter of its release. Surface Pro 4 did not bring substantial improvement to Microsoft's performance in the tablet computer market. In addition, according to IDC's statistics on global tablet computer shipments in the second quarter of this year, Amazon, which ranked fifth, shipped 1.6 million units with a market share of 4%, while Surface did not appear in the top five. The quarterly shipments of Surface tablets will not exceed 2 million units, and the shipments of Surface Pro 4 are even more imaginable. It can be seen from this that Surface tablets are still marginalized products, whether compared with their rival iPad or in the entire tablet computer market, and their status is about the same as that of Windows Phone, but the launch of Surface Book has covered up this marginalization.

Next, let's go back to the revenue of the Surface series. After the revenue exceeded $1 billion in the first two quarters, its revenue began to decline in the last two quarters. Even when the revenue increased significantly year-on-year, the absolute value of the revenue was low. This shows that after two quarters of the superposition effect of the Surface tablet and Surface Book, the phenomenon of cannibalization between the two began to appear, which led to users either choosing between the Surface Pro4 and the Surface Book; or choosing the cheaper previous generation Surface Pro tablet. At this time, the Surface Pro 4 seems to be quite useless. After all, when the productivity tool attribute is also used as a selling point, the advantage of the Surface Book is better than that of the Surface Pro 4 (just like a notebook and a tablet). It can be seen that with the continuous improvement of performance, especially the launch of the Surface Book, the useless characteristics of the Surface Pro will become more and more obvious. In addition to the fact that its performance in the real tablet market is far inferior to that of the iPad Pro as mentioned above, Microsoft seems to have no sufficient reason to update the Surface Pro, at least not according to the original one-year cycle.

But judging from its update of Surface Book and release of Surface Studio all-in-one computer, Microsoft prefers to use the traditional PC form factor to put pressure on Apple's iPad (tablet computer) and Mac (PC) at the same time, forcing Apple to introduce touch function on Mac in the future, so that there will be a cannibalization effect between Apple's iPad and Mac similar to that between its own Surface Pro and Surface Book. In this sense, Microsoft's strategy of shifting the focus of Surface from the previous Surface Pro (tablet computer) to Surface Book (two-in-one notebook) is a wise move.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.