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.

Some new editions of familiar products were missing when Microsoft unveiled new Surface laptops on Thursday.

This is because, according to insiders, the company has canceled products, including the next generation of Surface headphones, in order to focus on artificial intelligence investment rather than the more experimental devices that the company funded during times of prosperity. Microsoft did not respond.

The Surface Headphones were first released in 2018, with an improved version following in 2020. Some members of the tech press noticed in 2022 that a new version, which should have been shown if the device was released every two years, was missing from Microsoft’s fall device press conference.

The headphones, which are currently “out of stock” on Microsoft’s website, received positive feedback from the tech press, who praised the sound quality and features such as the dial adjustment for noise dampening. However, they were outshone in the market by products from Apple, Bose, Sony, and others.

While Microsoft and other tech companies frequently cancel underperforming products, Microsoft’s latest decision is significant because it represents a strategy that goes beyond canceling a single product.

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

According to sources, even Microsoft Windows, which has not met internal growth targets during the current difficult economic conditions, has been pilfered.

And, as previously reported by Insider, following these cuts and product cancellations in the consumer Surface business, Microsoft’s long-time exec in charge of the unit, Panos Panay, left to run Amazon’s consumer hardware business. Panay had been with Microsoft for nearly two decades and was a pioneer in the Surface tablet business. His departure was unexpected because it occurred just days before the hardware launch event in New York on Thursday.