Microsoft exec Panos Panay explains how the company keeps PC makers happy while also competing with them

Microsoft chief product officer Panos Panay fills two sometimes contradictory roles for the company.

On one hand, he’s been hyping Microsoft’s Surface PCs since Microsoft showed its first tablet in 2012. But he’s also responsible for the Windows user experience. That means he has to convince PC makers to ship and promote new versions of Windows, even as Microsoft competes directly against them.

That dual role is on full display this week as Microsoft starts offering upgrades to Windows 11, its first new operating system since 2015, while at the same time launching its latest Surface computers.

“I spend as much time with the OEMs as I do with Surface right now,” Panay told CNBC.

He declined to say whether Surface or Windows is more important to him than the other, but Windows licenses still generate considerably more revenue for Microsoft than Surface computers. Morgan Stanley estimated that Microsoft will generate $13.3 billion in Windows OEM revenue and $6.5 billion in Surface revenue in the 2021 fiscal year.

But the partners that license Windows haven’t always supported Microsoft’s moves to step on their turf with its own tablets and laptops. The CEO of Acer told the Financial Times Microsoft should “think twice” when it first introduced its Surface tablet in 2012. And Asus reportedly felt blindsided when Panay unveiled the Surface Book — which was more like a traditional laptop computer — in 2015.

When Panay speaks at Microsoft events about the latest Surface computers, he almost unnaturally enthusiastic and oddly specific about hardware components. Now, he said, he’s excited — he likes to use the word “pumped” — about the diversity of options for consumers and organizations, no matter who builds the hardware.

“OEMs provide choice for customers,” Panos said of Microsoft’s partners. “Not just choice for choice’s sake. What do you want to accomplish? You can pick a device that suits you.”

‘A level playing field’
In 2016, Microsoft announced a partnership with Lenovo, the world’s biggest seller of PCs, in an effort to prevent conflicts that might arise between the Surface business and Windows.

“We came to a very simple approach…we call it a level playing field,” said Lenovo’s leader of worldwide strategic alliances, Christian Eigen, who has known Panay for 15 years. “It means Microsoft does not give, from an operating system point of view, any feature exclusively to Surface.”

“It was definitely, by far, more transparent and open and kind of cooperative development,” Eigen said. He joined Lenovo, the world’s top PC maker by unit shipments, in 2011 and was there for the releases of Windows 8 in 2012 and Windows 10 in 2015.

Steven Sinofsky, who supervised the releases of Windows 7 and Windows 8, had pushed for a different approach to partner communication in 2018 when he said in a blog post any changes in direction can make the company look bad and cause issues for partners and customers.

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