I think its largely a combination of things:
-MS is slow to refresh, so those who want it, already have the current model. Conversely if you are thinking of buying one, you know Kaby Lake iss out and 'any day now', a new Surface model will release.
-The tablet fad has pretty much come and gone. Apple doesn't talk excitedly about the iPad anymore, and that is the poster child for 'tablet'. The novelty and 'maybe this will be better' aspect seems to have largely given way to the reality that for most things, a keyboard and mouse in a laptop form factor is more convenient, and in terms of portability, it may be more portable than a laptop, but mobile phones win on that front. So a tablet is the best way to watch videos and read documents at your home or office, and that's about it. A surface is no better at those tasks than a cheaper android tablet.
-The new microsoft has lost its obsession at beating Apple at its own game, and has re-emphasized how they dominated Apple in the desktops, and is leaving things more in the hands of their partners. Manufacturing hardware is a thankless job, and a diverse ecosystem was what attracted consumers to Microsoft's partners in the first place. Of course Microsoft is currently stuck between Apple doing first party everything and Google offering Android for free, and letting the manufacturers pretty much tailor the platform to a much greater extent than Microsoft does. All this aside, once the market has chosen, it's very hard to make the market change its mind.