Microsoft is cancelling experimental products like its Surface headphones to focus on investing in AI, insiders say

Microsoft is cancelling experimental products like its Surface headphones to focus on investing in AI, insiders say

  • Microsoft introduced new Surface laptops on Thursday.
  • Missing from the lineup were new editions of other familiar products, like the Surface Headphones.
  • Microsoft is canceling the headphones and ending development of experimental devices to focus on AI.

When Microsoft introduced new Surface laptops on Thursday, some new editions of familiar products were missing.

That’s because the company has canceled products, including the next generation of the Surface headphones, to focus on investment in artificial intelligence, insiders say, rather than the more experimental devices the company funded in flush times. Microsoft did not comment.

The Surface Headphones were originally launched in 2018, and an improved version launched in 2020. In 2022, some of the tech press noticed that a new version, which should have been shown if the device was on a two-year cadence release, was missing from Microsoft’s fall device press conference.

The headphones, which are listed as “out of stock” on Microsoft’s website, achieved good reviews from the tech gadget press, who liked the sound quality and features like the dial adjustment for noise dampening. But they were overshadowed in the market by devices from Apple, Bose, Sony, and others.

While Microsoft and other tech companies cancel low-performing products all the time, there’s a bit more significance to Microsoft’s latest decision because it’s a strategy beyond canceling a single product.

Many teams across the company are seeing budgets cuts and layoffs, even those led by long-term senior executives, in favor of AI investments.

Even Microsoft Windows, which hasn’t met internal growth objectives during the current tough economic conditions, has been pinched, sources say.

And, as Insider previously reported, after these cuts and product cancellations to the consumer Surface business, Microsoft’s long-time exec running the unit, Panos Panay, left Microsoft to run Amazon’s consumer hardware business. Panay had been with Microsoft for nearly 20 years and was one of the creators of the Surface tablet business. His departure was a surprised as it came just days before Thursday’s hardware launch event in New York.

Are you a Microsoft employee or do you have insight to share? Contact reporter Ashley Stewart via the encrypted messaging app Signal (+1-425-344-8242) or email (astewart@insider.com).

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