Orders for Microsoft’s Surface devices, including the latest models, have been much smaller than the original expectations of Pegatron, the contract manufacturer which assembles them.

According to sources from the upstream supply chain cited in a DigiTimes report Tuesday, Pegatron Technology has seen weakening orders from clients recently.

Here’s an excerpt from the report:

Since demand for Microsoft’s Surface products has been seriously undermined by other first-tier vendors’ similar devices, the software giant has been conservative about placing its orders, which have been much lower than than Pegatron’s original expectations.

Pegatron also assembles iPhones alongside Apple’s longtime manufacturer Foxconn.

The Windows giant unveiled a fifth-generation Surface Pro tablet on March 27 alongside a new Modern Keyboard with a built-in fingerprint reader and other accessories. Among other features, the device has 13.5 hours of battery life, Intel’s seventh-generation Core processor code-named “Kaby Lake”, a new Alcantara keyboard, a next-generation Surface Pen and more.

The same Intel chip also powers, Microsoft’s $999 MacBook rival, dubbed Surface Laptop.

Speaking of which, DigiTimes says that Surface Laptop orders are unlikely to boost Pegatron’s revenues until later in the third quarter of 2017. Pegatron Vice Chairman Jason Cheng expects revenues in the second half of 2017 to at least stay flat year on year.

Microsoft is reportedly set to lay off thousands of sales staff around the world in the latest round of restructuring, TechCrunch said a few days ago. Bloomberg added that the redundancies would be “some of the most significant in the sales force in years.”

  • George

    That’s really sad about all the job loss 🙁

  • AOGV

    LOSERS

  • ProllyWild

    oh noooo what….?….noooo…… they weren’t ready….

  • czbird

    Hopefully era of these hipster devices finally comes to an end… I wish big companies again started to focus on the “IT workers” instead of managers who only need Outlook and a PDF reader…

  • Rowan09

    The price to me is the main issue with these devices. While I as a tech guy knows the difference, most people looking for a portable laptop won’t be buying a Surface Pro. They have so many other alternatives running the same Windows OS for a fraction of the price. There’s nothing really they can do besides getting rid of the line all together. They can’t compete with the other manufacturers selling touch screen laptops running Windows OS no matter how inferior they are compared to the Surface Pro.

    • Iskren Donev

      Some time ago I heard an interview with one of the people behind the Surface line of products. He was asked this very question – why would someone buy a Surface when there are similar devices for a lower price?

      His answer boiled down to this – Microsoft wants to keep Surface a premium brand (much like Apple’s products) and they are not willing to make a cheap Surface tablet/laptop since it will destroy the premium feel of the brand.

      While on the surface (pun intended) this makes sense, Apple has an advantage of having their own distinct ecosystem when selling their premium products. On Microsoft’s side, they are selling tech that runs Windows – just like their competitors and hence the differentiation is minimal.

  • M_Hawke

    Bummer. Bring down the price and more will buy them. Myself included.

  • Bryan

    Ordered but no stock

    • Rowan09

      Try Best Buy they have them.

  • sor

    No USB C = dumb move. Of course sales are bad.