Panos Panay has always been the force behind Microsoft’s Surface line. He helped bring Surface to life as a secret project more than 10 years ago. He has presented the new devices on the event stage, appeared in shopping centers to promote Surface hardware and has led Microsoft’s Surface tablets to success in the years since.
Now, he’s leaving in a surprise exit announced just days before Microsoft’s next big Surface event. Panay will no longer appear at Microsoft’s showcase on Thursday, but will remain with the company for a couple more weeks as part of a transition process. He will reportedly join Amazon to replace Dave Limp and lead Amazon’s Echo and Alexa push. Amazon will also hold its own hardware event on Wednesday.
Panay has spent the last decade focusing heavily on Surface devices after Microsoft first developed its tablet as a rival to Apple’s Windows-based iPad. The Surface Pro tablet, which began as a rope-and-plastic concept, has had a lasting influence on Windows laptops, pushing Microsoft’s OEM partners and rivals to focus on quality and 2-in-1 devices. of the line led Panay to the position of product director at Microsoft.
With Panay’s shocking resignation, Microsoft’s event in New York City will now offer the first look at the future of Windows and Surface under new leadership. Microsoft is expected to introduce three new Surface devices, but will also focus on AI-powered features for Surface, Windows, Office, Bing, and more.
Yusuf Mehdi, Microsoft’s chief consumer marketing officer, will now assume responsibility for externally leading the Windows and Surface businesses and products. Crucially, Mehdi’s job title hasn’t changed with Panay’s departure here, so Microsoft no longer has a product manager.
With no clear replacement for Panay’s sole role at Microsoft, it appears that Mehdi will assume his responsibilities of being the main face of Windows and Surface devices. While Panay is a product manufacturer, Mehdi has, in most cases, been the marketer for Microsoft’s various consumer efforts.
He first joined Microsoft in 1992, working in product management for Internet Explorer and Windows before helping lead Microsoft’s entry into search with Bing. His career at Microsoft spanned three different CEOs (Bill Gates, Steve Ballmer and Satya Nadella) and a variety of different product launches. He has been involved in Surface, the launch of Windows 10, and the HoloLens headset.
Mehdi was also at the center of Microsoft’s failed television push for Xbox and the launch of the Xbox One console. Later, he was in charge of a “modern living” initiative to try to win back consumers that Microsoft had disappointed, following the company decisions to eliminate its Groove Music service, discontinue Kinect, scrap its Microsoft Band fitness device, and even discontinue Windows Phone. Microsoft finally laid off its modern life team during last year’s cuts.
Microsoft is dividing some of Panay’s other responsibilities. Pavan Davuluri, who leads a team focused on silicon, systems and devices in Windows and the cloud, will now report directly to Rajesh Jha, vice president of experience and devices at Microsoft. This team includes key Surface talents such as Ralf Groene, Stevie Bathiche and Robin Seiler. Pavan will also assume responsibility for Windows planning and release management.
Interestingly, Microsoft is also creating a new “Windows and Web Experiences” team. Microsoft often forms these types of teams when it wants to tackle a particular new area for Windows, and this time, it’s creating AI-powered web services for Windows. We’ve already seen Microsoft pivot towards web features in Windows 11, with basic things like the search interface that updates dynamically from the web, a widget system, and more. So let’s hope to see a lot more of this in the future.
Mikhail Parakhin, who has focused on Bing Chat in recent months, leads this new experiences team and will include executives who have experience in product management, engineering, and working with Android across Microsoft devices.
These Windows and Surface leaders will now steer Microsoft’s operating system and hardware toward AI. It’s what Microsoft wants people excited about right now and something we’ll likely see a lot of at the company’s event on Thursday. Microsoft has increasingly tried to use Windows as a vehicle for its AI efforts or to try to bring Bing and Edge to consumers and businesses alike.
I interviewed key members of Surface last year for a story about 10 years of Surface, and in speaking with them it was clear that AI was going to have a big impact on Windows and Surface over the next decade. There have been persistent rumors about the company building its own Arm chips for servers and Surface PCs, and even rival AI chips to avoid a costly dependence on Nvidia.
“AI is going to reinvent the way you do everything in Windows,” Panay said earlier this year. Panay will no longer be at Microsoft to lead this reinvention of the way Windows is used. But his resignation hasn’t signaled a change in strategy or change of direction for Windows at Microsoft, as far as I can tell.
The question now is how Microsoft continues to innovate on the hardware side. Panay was always a gadget fan as he led the development of the Surface Pro in which companies like Apple, Dell, and Asus produced their own Surface-like devices. But Microsoft signaled changes to its hardware portfolio earlier this year amid layoffs. Is there still room for Surface to make innovative laptop and tablet designs like we’ve seen over the past decade, or does Microsoft’s push for AI overshadow risky hardware bets?
Microsoft is rumored to have scrapped plans for a dual-screen Surface Duo 3, years after effectively canceling its Windows-powered Surface Neo dual-screen device. It’s unclear what the future holds for Microsoft’s own Android efforts. The original Surface Duo has just reached the end of its lifespan with just two Android version updates. Microsoft mice, keyboards, and webcams have also been discontinued in favor of Surface accessories.
Microsoft also invested heavily in Windows 11 during the pandemic and boom in PC sales, but Surface and device revenue took a hit this year as PC shipments saw big drops. Before the rise of the PC pandemic, Nadella was also looking to a future beyond Windows, iOS and Android. In January 2020 he joked that Windows could be called “Azure Edge” in the future to make clear that cloud services are Microsoft’s biggest hardware business.
During the FTC v. Microsoft Listening to this, we hear that Microsoft wants to move Windows entirely to the cloud on the consumer side, something it has increasingly been doing on the business side with Windows 365. The formation of a new web-focused Windows team suggests that this effort is largely in motion.
Perhaps this uncertainty around the PC business after a huge sales boom has led Panay to want to simply build devices rather than the complicated task of running Windows and preparing it for AI and a cloud future.
All of this will be top of mind as we watch Microsoft discuss Windows and Surface at its event on Thursday. We’re entering a new era of AI for Windows and Microsoft’s many services, and it will be key to see exactly how Surface plays its role without one of its key inventors at the helm.