Microsoft Surface revenue dipped 4 percent in FY20 Q1 results

By Dan Thorp-Lancaster
published

The results fall in line with what Microsoft projected during its last earnings call.

Surface Pro 7
Surface Pro 7 (Image credit: Windows Central)

What you need to know

  • Microsoft reported its Q1 2020 fiscal year results today.
  • Surface revenue was down four percent compared to Q1 2019.
  • Microsoft blames the dip on the product lifecycle transition period leading up to its latest Surface launch.

Microsoft's earnings report (opens in new tab) is out for the first quarter of its 2020 fiscal year, and the company raked in $33.1 billion in revenue overall, an increase of 14 percent. For its Surface business, however, things were down slightly when compared to the same period a year ago.

According to Microsoft's report, Surface revenues were down four percent for the quarter. The company cites the product lifecycle transition for the downturn.

Microsoft projected Surface revenues would be down (opens in new tab) year-over-year in its Q4 guidance, so this isn't an unexpected turn. Back in July, the compnay told investors "Surface revenue will decline slightly year over year driven by product lifecycle transitions" and that is exactly what happened.

This month, Microsoft released the Surface Pro 7 and Surface Laptop 3, replacing the last generation of Surface devices as they reached the end of their product refresh cycle. The Surface Pro X is expected to hit stores on November 5. With three devices launching between October and November, it's likely we'll see Surface revenues move up next quarter.

Microsoft will host a conference call at 5:30 pm ET, during which we should hear a further breakdown of the numbers, as well as guidance for Q2.

Dan Thorp-Lancaster
Dan Thorp-Lancaster

Dan Thorp-Lancaster is the Editor in Chief for Windows Central. He began working with Windows Central as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl. Got a hot tip? Send it to daniel.thorp-lancaster@futurenet.com.

10 Comments
  • But was it not going so well for the Surface products? Perhaps all the many Android and IPhones starts to make it more common to use Imacs and Chrome books?
  • You're reading WAY to much into this. Go back to July when Microsoft gave investors guidance on what to expect this quarter: "Surface revenue will decline slightly year over year driven by product lifecycle transitions." That's what happened. It was expected pre-October launch. For an investor, Microsoft delivered GOOD news. When a company projects A and they deliver A the next quarter, that makes investors very happy. Now, had the drop been much worse than projected, that would be bad. Rev dropped only from $1.3B to $1.1B.
  • It's because of the time of year. Of course revenue was going to fall right before the launch of a slew of new devices.
  • This was expected. With SP7, SPX, SL3 (13 and 15) around the corner, many potential consumers would certainly have held off new purchases over the last quarter
  • Man doomsayers will cling to anything. Given all the rumors swirling about the fall event I would have been shocked if the revenues hadn't dropped. It is still a billion+ revenue stream in the downswing. I am betting FY2020 Q1 will also be down in the lead up to the Neo/Duo launch.
  • I think the Surface line is overpriced - ALL of it. That's why people are not buying it; there are way better options. Lenovo, Dell, and HP all make much higher spec devices for way less money. I've got a Surface GO; nice little device, great screen, but way overpriced (with the keyboard) and way underpowered (I made the BIG mistake of buying the 4 GB RAM model; all of my family phones have at least 6 GB RAM....). My beloved Lenovo YOGA 2 Pro did an amazing job for the past 5 years; amazing device, but the battery finally fizzled and I needed to find something more up to date. I picked up a Lenovo Flex 15 with 16 GB RAM, 512 SSD, HD screen, multiple ports, fingerprint reader etc, for $1000 Canadian! (it's normally $1500, but I got it on a flash sale on the Lenovo site). That's less than 1/2 the price of the same spec'd Surface device. There was just no way I was going to spend double the money for the same specs (actually more than double!) The Surface line is overpriced...Lenovo sells the most PC's worldwide, and I personally can attest to why.
  • Update: I just checked the Microsoft Store; the Surface Pro 7 configured with i7, 16 GB RAM, 512 SSD is a whopping $2559.00 CDN. That's 2 and half times more expensive than my equally spec'd Lenovo...
  • Agreed. And disappointing at times too, as in the Surface Laptop 3. Either way, insanely overpriced. Be thankful you're not in NZ, where we pay quite literally, double the US price. You need to sell a kidney to afford one.
  • And that is the problem with the Surface products. The specs you get are way too low when you see what that kind of money gets you spec wise at other companies. Most people will quickly realize that. The Surface line of products are beautiful but nothing else.
  • That's pretty much the point though.... Being very nice to be in the high product line... Nothing to do with specs... On the contrary it is here to be more expensive so other OEM can rack up on the low and mid range of products... The point of surface is just to give an industry gold standard so OEM sell products and therefore ship win10, office and bunch of MS products and licence... Surface is not suppose to be a top seller cannibalizing the market...