Microsoft gets less revenue from Surface devices, but sells more consoles

Microsoft’s Surface branch is one of the few business units that turned in less turnover in the past quarter than a year earlier. The decrease is 17 percent compared to a year earlier. According to Microsoft, this is partly due to the ongoing chip shortages.

According to Microsoft’s CFO Amy Hood, the 17 percent drop in sales is partly because sales were very high last year. According to Seeking Alpha, she says this in an explanation of the quarterly figures. Last year, sales from Surface devices rose sharply, by 37 percent. However, the chip shortages also played a role in the declining turnover of the past quarter.

Hood expects Surface sales for the rest of the year to lag behind last year. According to the chief financial officer, this will mainly be the case with premium devices and that is due to the chip shortages. However, the decline should slow down and will remain below ten percent, Hood expects.

The company also says it has sold more Xbox Series X and S consoles than expected. In the quarter, Microsoft achieved 166 percent more revenue from Xbox hardware than a year earlier. The Xbox Series consoles came out in November last year; that would explain why console sales in the third quarter of 2020 were relatively low and why the company was able to achieve higher sales this year than a year earlier. Revenue within the Xbox content and services subcategory remained fairly stable. Microsoft achieved 2 percent more revenue from this than a year earlier.

Microsoft’s Cloud arm brought in $20.7 billion in the quarter, 36 percent more than a year earlier. According to the company, this is because, since the corona pandemic, companies are switching more often to a hybrid form of working, in which working in the office and working from home are combined. This would require new platforms and tools, which Microsoft offers with the Cloud division. It is the first time that this branch brings in more than twenty billion dollars in a quarter.

The Intelligent Cloud arm brought in $17 billion, 31 percent more than a year earlier. Revenue from Azure and other cloud services increased by 50 percent. LinkedIn delivered 42 percent more revenue and Office Commercial delivered 18 percent more revenue for the company. Microsoft now has 54.1 million 365 consumer customers, increasing Office Consumer revenue by ten percent. Revenues from the Windows OEM business increased by ten percent.

From July through September, Microsoft had revenues of $45.3 billion. This is an increase of 22 percent compared to a year earlier. Net profit was $20.5 billion; 48 percent more than last year.

Microsoft Surface Laptop 3