Microsoft FY20 Q2 earnings: Windows 10 OEM revenue up 18 percent as Windows 7 winds down
Microsoft's Windows OEM revenue grew 18 percent riding on Windows 7 support ending, but also due to more Intel chips being around.
What you need to know
- Windows OEM revenue was up 18% overall.
- Windows 10 Pro licenses were up 26% due to Windows 7 EOL.
- Windows OEM non-Pro revenue was also up by 4 percent.
Microsoft's earnings report (opens in new tab) is out for the second quarter of its 2020 fiscal year, and the company raked in 36.9 billion beating most estimates.
Overall, Windows OEM growth grew 18 percent ahead of the PC market growth. Microsoft notes that "chip supply constraints" last year drove that discrepancy to be larger than it should be, and this is more of a correction. Intel was noted to have issues meeting the demand for its 14nm chipsets to OEMs, which in turn reduced sales of Windows licenses.
Windows 10 Pro had a massive quarter partially driven by Windows 7 support coming to an end as enterprise scrambles to upgrade to new hardware. That has resulted in a significant but expected growth in Windows 10 Pro licenses, which were up 26 percent from last year.
However, even Windows 10 Home and OEM sales saw a nice uptick, too, with a 4 percent year-over-year increase. Microsoft cites "the benefit from the low prior year comparable and the timing of license purchases" that "more than offset continued pressure in the entry-level category."
Update: On the earnings call, Microsoft's CFO Amy Hood noted noted that next quarter the company expects lower to mid single digit growth driven by the end of Windows 7 support, generally "healthy demand" from consumers and Microsoft's partners' ability to meet that demand.
When combined with Surface revenue (up 6%), Xbox content (down 21%), Search (up 6%), the More Personal Computing division (one of the big three at Microsoft) was up in revenue by two percent (or 3 percent in constant currency).
See more of Microsoft's full quarter results.
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Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics, watched people sleep (for medical purposes!), and ran the projectors at movie theaters because it was fun.