Panos Panay, chief product officer of Microsoft Corp., displays the new Surface Laptop 3 computer during a Microsoft product event in New York on Oct. 2, 2019. Microsoft unveiled a dual-screen, foldable phone that will run on Google’s Android operating system, jumping back into a market it exited years ago.
Mark Kauzlarich | Bloomberg | Getty Images
Microsoft made a splash in 2012 when it introduced the Surface, the first computer it had built in its 37 years of existence. The computers are still kicking 10 years later, with Microsoft issuing annual updates, but Surface’s mega-growth is long in the past.
Microsoft tried to reimagine tablets, which are made popular by the iPad, when it launched into the PC market. In 2012, the Surface with Windows RT, later named Surface RT, was more than just a touchscreen slab like Apple’s iPad. The Surface could act as a full PC with an optional cover featuring a keyboard and trackpad.
Apple in the ensuing years would make the iPad more like the Surface, adding similar accessories, while Microsoft would do what it usually does: Roll out a series of small updates. It later added new Surface computers to the family, including an all-in-one PC, a standard laptop and miniature versions of the Surface.
Those steps have brought about growth. In Microsoft’s most recent fiscal year, Surface kicked in $6.7 billion of the company’s $198 billion in total revenue. That’s more than the total revenue of over 100 companies in the S&P 500 index.
But the hyper-growth vanished after the first three years. In the 2022 fiscal year, Surface revenue increased by 3%, despite being smaller than PC initiatives at several other companies. Apple’s Mac business, at almost $38 billion, grew about 8% over the same period.
Surfaces just aren’t as popular as other computers. They have never managed to take more than 2.1% market share of PC shipments, according to an estimate from technology industry researcher Gartner. Lenovo has a 25% share of the market, while HP has 19% and Dell has 18%, respectively.
Microsoft declined to comment on whether it considers Surface successful.
“We design Surface to be the one place where the best of Microsoft comes together, delighting customers and inspiring the Windows ecosystem,” a spokesperson told CNBC in an email. “Surface began as a tablet to replace your laptop, showcasing Windows capabilities like touch, ink, Windows Hello, and more. Since then, the 2-in-1 category has taken off and Surface has grown into an innovative portfolio of products offering premium designs and capabilities that consistently earn high customer satisfaction.”
That Surface has not surpassed more experienced PC makers might not be such a bad thing anyway. PC builders are among Microsoft’s most prominent clients because they pay Microsoft a fee for the copy of Windows that goes on each computer. Upstaging them might not be wise.
Surface has held on to an important role — bringing to market Windows PCs with fresh designs, Gartner analyst Mikako Kitagawa told CNBC in an interview.
“I think those are the things they should really focus on, instead of looking for share gain and revenue growth,” she said.
If Microsoft were to charge forward in pursuit of dominant share, they could kill their customers, she said. Kitagawa recalled that Windows PC makers were not very happy with Microsoft when the first Surfaces arrived. “Taking 3% share was taking from somebody, right? That’s not incremental share,” she said.
Premium feel
Microsoft Corp.’s Surface tablet computers, aiming to compete with Apple’s iPad, are displayed at Hollywood’s Milk Studios in Los Angeles Monday, June 18, 2012. The 9.3-millimeter thick tablet comes with a kickstand to hold it upright and keyboard that is part of the device’s cover. (AP Photo/Damian Dovarganes)
Damian Dovarganes
The first line of the news release about the 2012 Surface showed Microsoft’s intent. These computers were meant to be “the ultimate stage for Windows.” A section near the bottom acknowledged the clients that were suddenly becoming the competition. “Microsoft is delivering a unique contribution to an already strong and growing ecosystem of functional and stylish devices delivered by original equipment manufacturers (OEMs) to bring the experience of Windows to consumers and businesses around the globe,” the company said.
The inaugural Surface, the Surface RT running Windows RT, boasted clever physical attributes. A thin but sturdy kickstand could sweep out and prop up the display on a table or a desk. The case was made out of magnesium in a process called VaporMg, which lends it a premium feel akin to the aluminum wrapping up Apple’s MacBooks. An optional magnetic Touch Cover contained a narrow keyboard and a trackpad that doubled as a cover for the display. A power-sipping Arm chip gave it respectable battery life.
But the Surface RT blocked people from opening programs that weren’t listed in Microsoft’s app store, preventing them from using most existing Windows software. Basically, there wasn’t a lot you could do with it, and many third-party developers hadn’t done the work to adapt their software to it. The device garnered less than glowing reviews, with The Verge calling it “honestly perplexing.” “Little inconsistencies and bafflements are everywhere,” The New York Times’ David Pogue wrote.
Microsoft Surface with Windows 8 Pro
Source: Microsoft.com
In 2013 Microsoft brought out the Surface RT’s more expensive and more powerful sibling, the Surface Pro. It contained a stylus, along with an Intel chip that could run real Windows programs, with stronger performance than the Surface RT.
For Microsoft to put forth a more traditional Intel-based Windows PC would be bold. It would directly challenge some of the company’s top clients. “It did not seem prudent,” Steven Sinofsky, president of Microsoft’s Windows division who left the company in 2012, wrote in “Hardcore Software,” a detailed recollection of his experience that he’s been publishing in parts on Substack. Windows was Microsoft’s main source of profit. If even one of the major Windows device makers were to stop building Windows PCs, that would be, in Sinofsky’s words, “a massive problem.”
Microsoft pressed on anyway.
Like the Arm-based Surface RT, the Intel-powered Surface Pro wasn’t perfect. It could only run for a few hours on a single charge, and it was heavy and impractical to use as a tablet. And regular laptops offered better keyboards than those that Microsoft sold separately for the Surface Pro.
Cutting into profit
Microsoft’s Surface Laptop Go 2 starts at $599.
Microsoft
A few months later Microsoft revealed a black eye. It trimmed the price of the Surface RT by $150 to $349 and instituted inventory adjustments for related parts and accessories, which resulted in a $596 million reduction in its quarterly net income.
But Microsoft did what it usually does. It stuck with the Surface line instead of ditching a challenged brand. It rolled out refinements, such as making the hinge on the back of the tablet adjustable and changing the aspect ratio in such a way that work became more comfortable in landscape orientation.
By 2015, Microsoft had walked away from Windows RT and was focused on building devices with Intel chips that could run standard Windows applications.
Meanwhile, copycats were coming out from top PC makers such as Dell, HP and Lenovo. And Apple was also responding, rolling out the laptop-like 12.9-inch iPad Pro and compatible Apple Pencil stylus and Smart Keyboard cover in 2015.
It was a strong dose of validation for Microsoft. In 2012, before the Surface came out, and there were only rumors of Microsoft’s plans for Windows, Apple CEO Tim Cook told analysts that “you can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user.”
Yet in 2017, Apple, perhaps Microsoft’s toughest corporate critic, capitulated. It came out with a toaster-refrigerator combo of its own, said Michael Gartenberg, a technology industry strategist and former Gartner analyst. “It’s clearly become a mainstream design,” Gartenberg said.
Also that year Microsoft introduced the Surface Laptop. While it was as boring as any other laptop, it left out the software that sometimes could burden Windows PCs from other manufacturers, the sorts of things end users might want to spend time deleting, Gartenberg said.
Microsoft Corp. surface 5 laptop computers on display at the company’s Ignite Spotlight event in Seoul, South Korea, on Nov. 15, 2022. CEO Satya Nadella gave a keynote speech at an event hosted by the company’s Korean unit.
SeongJoon Cho | Bloomberg | Getty Images
In 2019, Microsoft took another shot at an Arm-based Surface, with the Surface Pro X. Reviewers gave it credit for long battery life but dinged it for performance and compatibility reasons, not unlike the original Surface RT.
This year, Microsoft made things more complex by introducing an Intel-based Surface Pro 9 along with an Arm-based version, which put an end to the distinct brand for Arm-flavored Surface. People have fretted that the Arm model of the Pro 9 is still unable to run some programs. The Intel version has received more praise. “The removal of the headphone jack is the only new thing that’s wrong with it,” Ars Technica said in its review.
Those who opt for the Surface Pro 9 with an Arm chip can at least access a broad swath of apps. The 2022 update to Windows 11 includes a way to run over 50,000 Android apps through the Amazon Appstore.
If you look at it for just a second, the Surface Pro 9 with Intel inside looks a bit like the 10-year-old Surface RT. Changes inside and out have made it tougher to dismiss as a novelty. There’s a button to enable the Function row on the keyboard, which boasts a more responsive trackpad. Enhancements to Windows make it easier to tap buttons on the screen when using the Surface as a tablet. You can open the programs you need.
Surface Pro 9, Surface Laptop 5 and Surface Studio 2+.
Microsoft
Gartenberg, who lives in New Jersey, doesn’t see many people using Surfaces in the real world, although he did recently witness a man working on a Surface while walking around outside. The man was wearing a harness that held the Surface just off his chest, so he could tap on the screen when necessary, Gartenberg said.
There’s one place you’ll certainly see them, though. During televised games, you can spot players, coaches and referees using branded Surface machines at National Football League games as a result of a partnership Microsoft struck with the NFL in 2013.
Buffalo Bills defensive line coach Eric Washington reviews plays on a Microsoft Surface tablet
Robin Alam | Icon Sportswire | Getty Images
In the course of a decade, Microsoft has managed to raise the bar for Windows PC makers, demonstrating that a top tier of Windows can exist, Gartenberg said.
“If someone said to me, ‘I need a Windows PC,’ what would I recommend? I would say, ‘Go see what Microsoft is offering. Go see if that meets your needs,'” he said. “‘It’s not going to come with any junk you’re going to call me about, and it will just work.'”
‘No compromise whatsoever’
Surface Pro 9.
Microsoft
Still, it’s not very easy to locate Surface diehards. A few can be found by surfing Craigslist.
There is, for example, Stephane Prunet, an investment advisor in Berkeley, California. For years the device’s unconventional design has appealed to him. He bought a Surface Pro 3 and then a Surface Pro 7. The latter, which came out in 2019, is his main computer, and he runs Microsoft Excel and other work-related programs on it.
“I almost never use it as a tablet. Maybe I should, but I don’t,” he said. Earlier this month he listed both on Craigslist. If someone buys the Surface Pro 7 for a good price, he’ll upgrade to the Surface Pro 9, which has a larger display.
If not, he said, he’ll hang on to the 3-year-old Surface. He won’t be giving it away to one of his children. His daughter uses a Mac, and his son is happy with his own Windows laptop. “He’s never shown interest in the Surface,” Prunet said.
Sure, some people might want a bigger screen, but beyond that, he doesn’t understand how people would be better off with a regular laptop than with a Surface.
“Except the fact that maybe some laptops are less expensive. That’s probably an explanation,” he said. “Because otherwise, I find there is no compromise whatsoever. In fact, there are only benefits. The keyboard is very comfy. It’s not as rigid as a laptop, but who cares?”
SpaceX’s Super Heavy booster is seen on the launch pad, without the Starship atop, as it is prepared for launch from the company’s Boca Chica launchpad on an uncrewed test flight, near Brownsville, Texas, U.S. Feb. 27, 2025.
Joe Skipper | Reuters
Elon Musk’s SpaceX has attained authorization from the Federal Aviation Administration to fly its massive Starship rocket once again, the space regulator announced Friday.
The Starship rocket broke up during the company’s seventh test flight in January. The explosion caused debris to rain down over Turks and Caicos, and forced several commercial flights to be diverted or delayed, CNBC previously reported.
The FAA granted the modified license to SpaceX, which has a $350 billion private market valuation, even though the company has yet to complete its mishap investigation, required after the January explosion. The space regulator has previously authorized flights by companies including SpaceX and Rocket Lab while mishap investigations were still underway, a spokesperson told CNBC by email.
After those fines, Musk threatened to sue the FAA for “regulatory overreach” but never filed a complaint.
Musk, the world’s wealthiest person, contributed nearly $300 million to help propel President Donald Trump back to the White House, and is now a central figure in the administration.
Musk, who is also CEO of Tesla and the owner of social media company X, leads the so-called Department of Government Efficiency, or DOGE, which is implementing draconian staffing and budget cuts across the federal government, and targeting regulatory agencies that oversee Musk’s businesses.
Orange balls of light fly across the sky as debris from a SpaceX rocket launched in Texas is spotted over Turks and Caicos Islands on Jan. 16, 2025.
Marcus Haworth@marcusahaworth | Marcus Haworth Via Reuters
The role has afforded Musk and his DOGE staffers unprecedented access to federal computer systems and data including within the FAA. SpaceX has been selected to help overhaul the FAA’s air traffic control system, Trump’s Transportation Secretary Sean Duffy previously announced.
Senators Adam Schiff, D-Calif., and Tammy Duckworth, D-Ill., sent a letter on Friday to FAA’s acting administrator Chris Rocheleau, raising concerns about conflicts of interest.
SpaceX did not respond to CNBC’s request for comment.
Starship, the tallest and most powerful rocket ever launched, is critical to SpaceX’s ambitions. When it is stacked on the Super Heavy booster, Starship stands 403 feet tall and is about 30 feet in diameter. SpaceX has flown the full Starship rocket system on seven spaceflight tests so far since April 2023.
The company wrote in a social media post that it aims to conduct its eighth Starship test flight as soon as Monday, March 3.
Patrick Collison, chief executive officer and co-founder of Stripe Inc., left, smiles as John Collison, president and co-founder of Stripe Inc., speaks during a Bloomberg Studio 1.0 television interview in San Francisco, California, U.S., on Friday, March 23, 2018.
Bloomberg | Bloomberg | Getty Images
Stripe has once again shown why sometimes it’s better to be private.
During a February sell-off for fintech stocks, Block plunged 28%, its steepest decline since 2023, alongside drops of 20% or more for PayPal and Coinbase and a 8% slide in shares of SoFi. Meanwhile, Stripe on Thursday announced a tender offer for employee shares at a $91.5 billion valuation, making the payments company significantly more valuable than any of its public market peers.
“In general, they benefit from being private because there’s a handful of stocks that people want to buy and they trade at a premium to public valuations,” said Larry Albukerk, founder of EB Exchange, which helps facilitate trades in shares of pre-IPO companies.
He said Stripe is part of an exclusive group of private companies, along with SpaceX, Anthropic and Anduril, which are all seeing sky-high demand from investors.
“For every one of those, there’s 100 companies that don’t get that kind of premium,” Albukerk said.
The Collison brothers — Patrick and John — founded Stripe in 2010, a year after Jack Dorsey started Square, which is now part of Block. Crypto exchange Coinbase and online lender SoFi were both launched after Stripe.
While all of those companies went the traditional route of raising large amounts of capital from prominent venture capital firms, only Stripe has chosen to stay private. To relieve some pressure for liquidity, Stripe regularly allows early investors and employees to sell a portion of their stake. The tender offer this week marks a 40% increase from a year ago and gets the company close to its peak valuation of $95 billion that it reached in the frothy days of the Covid pandemic.
“We are not dogmatic on the public vs. private question,” John Collison, the company’s president, told CNBC’s Andrew Ross Sorkin this week, adding that Stripe has “no near-term IPO plans.”
Stripe’s peers have all had to report quarterly results of late, and it’s created a hefty dose of volatility and some concern. Last week, Block reported fourth-quarter earnings and revenue that missed analysts’ expectations, pushing the stock down 18%, its third-worst one-day drop on record.
PayPal shares tumbled even though the company blew past estimates and issued better-than-expected guidance. Coinbase topped expectations with revenue soaring 130%, powered by a post-election spike in crypto prices. Coinbase was a leading contributor to Republicans’ sweeping victory in November in its effort to help push forward a more crypto-friendly agenda in Washington, D.C.
But Coinbase fell earlier this week to its lowest price since just before the election, tumbling in tandem with bitcoin and other cryptocurrencies.
Brian Armstrong, CEO of Coinbase, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 21st, 2025.
Gerry Miller | CNBC
It’s been a rough stretch for stocks overall, particularly in the tech sector. The Nasdaq fell about 4% in February, and the S&P 500 declined 1.4%.
Fintechs can be more sensitive to economic conditions than the broader tech sector because they’re more directly effected by interest rates, employment data and consumer confidence.
Private market premium
By remaining private, Stripe is able to skirt the daily, weekly and monthly stock swings while also disclosing far fewer numbers to the public regarding its financial health.
The biggest revelation Stripe offered in its annual letter on Thursday is that it generated $1.4 trillion in total payment volume in 2024, up 38% from the year prior. The company said it was profitable in 2024, and expects to remain so this year, without providing specifics, and the only revenue figure it offered was that its finance and tax reporting unit topped a $500 million run rate.
Kelly Rodriques, CEO of private securities marketplace Forge, said Stripe’s valuation jump shows there’s enthusiasm for private companies, even some that aren’t focused specifically on artificial intelligence. Forge’s Private Market Index, which tracks demand for shares in private companies, has surged more than 33% in the past three months, and that’s before Stripe’s latest announcement.
“Stripe’s valuation increase could be further evidence of the broad rally we’re observing in the private market that is now rippling beyond the AI sector, which has driven most of the momentum over the last several months,” Rodriques said in an email.
Albukerk noted that another aspect to the spike in Stripe’s price is the scarcity of volume available for investors and the difficulty in getting access to it other than through the tender offers.
It’s one of those private companies “where there’s a lot of demand and very little supply,” he said.
However, just being private doesn’t eliminate Stripe’s other challenges.
In his interview on “Squawk Box,” John Collison highlighted the growing complexity of financial compliance and said banks are becoming more conservative in their partnerships with fintechs.
“We have started to see the financial system become more involved in financial policy enforcement,” Collison said. “And then you tend to get these occasional flare-ups from time to time.”
Both Wells Fargo and Goldman Sachs have distanced themselves from the company, according to The Information, prompting Stripe to turn to Deutsche Bank and other institutions for key services. Collison didn’t provide details to CNBC, but acknowledged that Stripe has had to navigate shifting relationships.
“Banks are tightly regulated, and they in general want to have a sound book of business,” he said. “They don’t want to get into arguments with their regulator.” According to The Information, Stripe has tripled its risk and compliance headcount to 700 employees over the past two years.
The area with the most regulatory scrutiny has been crypto, which was a notoriously challenging area for companies to operate during the Biden administration. The Federal Deposit Insurance Corporation recently released internal records obtained via FOIA requests, revealing that regulators had sent “pause letters” urging banks to reconsider relationships with crypto firms.
Trump has made a point of loosening restrictions on crypto, and one of his first actions as president was to sign an executive order to promote the advancement of cryptocurrencies in the U.S. and work toward potentially developing a national digital asset stockpile
Stripe made its biggest jump into crypto with the closing this month of its $1.1 billion purchase of Bridge, a provider of stablecoin infrastructure. Stripe’s goal with the deal is to enable more payments via crypto, as Bridge focuses on making it easier for businesses to accept stablecoin payments without having to directly deal in digital tokens.
In its annual letter, Stripe said that stablecoin transactions more than doubled between the fourth quarter of 2023 and the same period last year.
“The fundamentals for stablecoin adoption have only recently fallen into place, enabling the explosive growth we now see,” the company wrote.
Amazon is looking to expand its competitor to Temu and Shein beyond the U.S.
The company intends to launch its discount storefront, called Haul, in Europe later this year, according to two people familiar with the matter who asked not to be named because the plans are confidential.
Recent job postings indicate Amazon is eyeing a wider global rollout. One listing stated the company is looking to hire a software development engineer in the Haul team to help with a worldwide launch. The job was posted to Amazon’s website but has since been removed. Another role is for a senior product manager to assist with a launch in Mexico. Both openings were posted earlier this month.
An Amazon spokesperson said the company didn’t have anything to share on its plans for Haul, which were earlier reported on by The Information.
“We are always exploring new ways to work with our selling partners to delight our customers around the world with more selection, lower prices, and greater convenience,” the spokesperson said in a statement.
The expansion comes months after Haul’s debut. Amazon unveiled the online store in November, describing it as an “engaging shopping experience that brings lower-priced products into one convenient destination.” Haul is only accessible through Amazon’s mobile app, and most items are priced at $20 or less.
With Amazon Haul, the company is responding to the rise of Temu, Shein and TikTok Shop, which all have ties to China, the world’s second-largest economy. The platforms have rapidly gained popularity in the U.S. over the past few years by hooking deal-hungry shoppers with their low prices on clothing, makeup, home goods and other items. Like Temu, Haul offers ultra-low-priced products, like $1 eyelash curlers and cosmetic bags, or a $2.99 cubic zirconia ring.
Haul remains in beta for U.S. users, but Amazon has continued to build out the service, suggesting the company sees it becoming a more permanent fixture of its online store.
The since-removed job listing indicates Amazon CEO Andy Jassy’s S-team, consisting of top leaders, has set goals this year to make Haul “Go Big” in the U.S. and worldwide.
The launch of Haul in Europe could come with some challenges. Amazon would likely use plastic packaging for Haul shipments, which would conflict with its sustainability goals in the region, according to one of the sources. The company in 2023 transitioned to using only recyclable paper bags, cardboard envelopes and boxes or, in some cases, no added packaging, for deliveries in Europe.
Amazon is taking a page from its legacy online store to monetize Haul in more ways. The company this month began showing sponsored products in some Haul search results, allowing sellers to pay to have certain items appear at the top of the page. The company has stuffed more sponsored items into search results on its desktop site and mobile app over the years. They account for the bulk of Amazon’s ad revenue, which totaled $56.2 billion in 2024.
Amazon has added curated storefronts from lifestyle influencers within the Haul homepage. One features “fashion picks” from Michaela Delvillar, an influencer with more than 150,000 followers on TikTok, whose Amazon storefront says she’s a “Top Creator.”
Amazon is growing Haul, which relies on goods from China-based sellers, even as the practice comes under scrutiny from President Donald Trump. Earlier this month, Trump suspended, then reinstated, the de minimis rule, which allows exporters to ship packages worth less than $800 into the U.S. duty-free.
The loophole is expected to be shut again once the Commerce Department and customs officials put systems in place to process and collect tariffs on the millions of de minimis packages that flow into the U.S. daily. A significant portion of those packages originate from China.
Jassy was asked about the de minimis scrutiny on Thursday in an interview with Bloomberg Television. He said Amazon has a “certain number of items that are shipped in that way” for Haul, but likely fewer than Chinese e-commerce companies like Shein and Temu.