What you need to know
- Microsoft reported $1.5 billion in quarterly revenue for 2021.
- The number leads over $1.3 billion from the same time in 2020.
- Total revenue for More Personal Computing is up 19%, driven chiefly by Xbox and gaming.
Update 6 PM ET: During the investor call, it was noted that Microsoft did have "execution challenges" in shipping Surface this quarter, likely related to chip supply issues. Those challenges resulted in "lower than expected" revenue despite the YoY uptick. For the next quarter, a decline in Surface revenue is expected tied to those ongoing execution challenges. Windows 10 should have "mid-single-digit growth." The entire MPC division is expected to have between $13.6 and $14 billion in revenue for FY21 Q4.
Microsoft's earnings report (opens in new tab) is out for the third quarter of its 2021 fiscal year, and the company brought in a solid $1.5 billion in revenue for the Surface division.
Compared to this time last year, Microsoft pulled in $1.3 billion Surface revenue in April 2020, giving an uptick of 12% YoY.
Overall, Microsoft brought in $41.7 billion in revenue beating investor expectations.
The big news for More Personal Computing, especially the Surface division, is good all around. Microsoft is reporting a total of $13 billion in revenue in More Personal Computing, which includes Windows OEM licenses, Surface revenue, Xbox content and services, and Bing search advertising.
Xbox and gaming also had a massive quarter as it is up 50% in revenue.
Windows 10 OEM revenue is also up 10%, driven by solid consumer PC demand (Pro licenses were down by 2%, but non-Pro revenue is up a staggering 44%). Even Bing search advertising is up 17% YoY with "improved customer advertising spend."
Surface growth continues despite market uncertainties
The $1.5 billion for Surface contrasts with the figures from late January, which pegged Surface revenue breaking $2 billion for the first time. Revenue in More Personal Computing was $15.1 billion in January (up 14%) due to continued strong work-from-home demand, gaming, and PC sales from the holiday season.
A drop-off post-holiday is expected, and Microsoft appears to be weathering it well as it is up overall 19% YoY for More Personal Computing. While there is a widespread chip shortage, it does not appear to have impacted Microsoft's bottom line.
It has been a mostly quiet year for Surface, so far, with a refresh and expansion of the popular Surface Laptop 4, now with more options for Intel or AMD processors. The company also pushed out new accessories geared for business and work-from-home (WFH) environments, including Surface Headphones 2+, Surface Duo expansion and a low-cost webcam.
Microsoft also released Surface Pro 7+ with 4G LTE back in February aimed primarily at businesses.
Summer 2021 will be interesting to see how demand keeps up with sales for Surface, especially as the market switches over to back-to-school towards August.
Microsoft is expected to hold another Surface event later in the October or November timeframe. We could see Surface Duo v2, Surface Studio 3, refreshed Surface Pro X, and perhaps a redesigned Surface Pro 8 driving strong holiday sales once again.
You can read more about our Surface predictions and expectations in our guide published in late 2020.
Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been here covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, Microsoft Surface, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics and ran the projectors at movie theaters, which has done absolutely nothing for his career.
So you are saying MS made some money. Got it ;)
It's interesting to see how balanced the company's profits are, but make no mistake, cloud and business services are leading the way. According to Nadella (at the link above) cloud revenue is now larger than More Personal Computing, up by a third yoy. As an aside, it still bothers me that Europe and Japan don't have anything even close to competing with America's big tech companies. Where did they go wrong? What would the world look like if their companies could compete on equal footing with the likes of Apple and Amazon?
The reason is that the 'strong' ends up soaking up all the talent. Any talent or skills outside the US that is interested in such tech typically ends up in the US companies, making them even larger and stronger and creating a massive positive feedback loop. Look into any modern large tech company and you'll see they are an amalgamation of countless nationalities and backgrounds. They are only based in the US, but in reality, they are the sum total of the efforts of so many nationals. Add to that so many acquisitions these big companies make, and what you have is the situation today. At this point, they simply cannot be stopped anymore.
I got the surface laptop 4
In the meantime, Apple Mac +70% vs 1st quarter 2020. Apparently no chip shortage.
Daniel Rubino got slammed by Windows Weekly's crew about Surface revenue. Need to stop being such a MSFT fanboy, Daniel.
Surface revenue is up, but they won't update the surface studio because no one is interested in high end computers?
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