Could a Surface That Fits in Your Pocket Succeed?
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Microsoft (NASDAQ: MSFT) could be developing a new portable Surface device, according to an internal document obtained by The Verge. The document reportedly describes the project -- which was dubbed "Andromeda" in previous patent filings and reports -- as a "new and disruptive" device that could blur the lines between PCs and smartphones later this year.
Specifically, Microsoft calls Andromeda "a new pocketable Surface device form factor that brings together innovative new hardware and software experiences to create a truly personal and versatile computing experience." Based on Microsoft's latest patents, the device resembles a dual-screen foldable smartphone that could use one screen as a keyboard and the other as a display.
Image source: Getty Images.
In other words, it might look similar to ZTE's dual-screen Axon M smartphone, which TechCrunch called a "fascinating mess" last year. However, it's far too early to jump to conclusions, and there were plenty of other rumors about Microsoft's elusive "Surface Phone" over the past few years.
Why would Microsoft need a smaller Surface device?
Microsoft's greatest failure over the past decade was its loss of the mobile OS market to Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google and Apple (NASDAQ: AAPL). Windows Phone and Windows 10 Mobile devices only account for 0.2% of the mobile market today, according to NetMarketShare.
Last year, Microsoft ended support for Windows Phone, and halted the development of new features for Windows 10 Mobile. There simply weren't enough users or developers interested in Windows-powered smartphones anymore, and Microsoft pivoted its mobile efforts toward iOS and Android versions of its cloud-based apps instead.
Meanwhile, Microsoft's Surface 2-in-1 devices carved out a higher-growth niche in the stagnant PC market, and helped the company offset its mistakes in the smartphone market. Last quarter, Microsoft reported that its Surface revenues rose 32% annually, buoyed by "better than expected" sales of the Surface Book and an easy comparison to a cyclical slowdown in the prior year quarter.
Microsoft currently sells a wide variety of Surface products, including the Surface Pro 2-in-1 devices, the Surface Book detachable notebooks, the hybrid Surface Laptop, the Surface Studio all-in-one PC, and the massive wall-mounted Surface Hub for enterprise video conferences. However, persistent rumors suggest that Microsoft will eventually add a "Surface Phone" to that lineup -- which could benefit from robust customer demand for Surface-branded devices.