Microsoft will stop manufacturing Surface 3 by the end of the year, which raises a big question: Will there be a Surface 4?
The company has declined to say whether a Surface 4 will ever be released. But Microsoft says it saw strong demand for the Surface 3 tablet PC, so releasing a successor seems like a no-brainer.
But the PC market is challenged. Upgrades have slowed down to every five or six years, and tablet shipments—with the exception of 2-in-1s—are declining. PC makers are already releasing innovative products that could be viable options to a Surface 3 successor.
The price of the Surface 3 starts at $499, and the device is targeted at consumers. Microsoft also sells big brother Surface Pro 4, which has flashier features and starts at $849.
A strong brand with an uncertain future
An argument could be made for and against the release of a successor to the Surface 3, said Bob O'Donnell, principal analyst at Tirias Research.
Among arguments for a new product: After spending loads of money marketing and branding Surface products, Microsoft should continue with an entry-level Surface tablet, particularly for those who can't afford a Surface Pro.
The Surface has strong name recognition, and there's interest in upgrading budget PCs to 2-in-1 devices. A Surface 4 could serve that role, O'Donnell said.
At the same time, PC makers are already offering similar products, so Microsoft may not need to make a Surface 4, O'Donnell said.
It's a good idea to scrap a budget version of Surface, and focus on higher-end products to motivate PC makers again, suggested Roger Kay, principal analyst at Endpoint Technologies Associates.
Surface started off as a proof-of-concept to stimulate innovation among PC makers. The Surface Pro serves that purpose, but not the entry-level Surface. Microsoft should instead focus on innovation in the Surface Pro now that iPad Pro is emerging as a competitor.
The Surface products still upset PC makers, who feel Microsoft shouldn't compete with its own customers, Kay said.
"I have talked to a lot of OEMs, and they roll their eyes when they hear Surface," Kay said.
But if Surface 4 will make Microsoft heaps of money, that's a different story, Kay said.
New chips could mean new Surfaces
There are questions on what hardware a Surface 4 would use. The Surface 3 was based on Intel's Atom chip codenamed Cherry Trail, which will be succeeded by Pentium and Celeron chips code-named Apollo Lake. Those chips are primarily designed for 2-in-1 PCs, but will also appear in tablets.
The idea of buying a Surface tablet with a Pentium or Celeron chip—which have been used in low-cost laptops for a long time—may not appeal to some buyers.
If Microsoft does make a Surface 4, the device could instead carry a Core M chip, which is already used in a model of the Surface Pro 4.
In the long run, Microsoft has to figure out what to do with the entire Surface lineup. The Xbox is the soup-to-nuts money maker, the HoloLens is the game changer, but there are questions on the motivation behind Surface devices, Kay said.
"What's their purpose? Are they making money? Are they making prototypes?"