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Psst - wanna buy some Microsoft hardware? Increasingly, the answer is Yes.

Yesterday, Microsoft reported financial results for the second quarter of its fiscal 2019. Not surprisingly, the headlines this morning focused on the slowdown in Windows sales, which Microsoft says should continue for at least another quarter, and the rise of the company's cloud business.

But buried in the numbers was the revelation that Microsoft's Surface PC hardware business increased sales in Q2 year-on-year by an impressive 39%, for a quarterly total of $1.86 billion.

Microsoft Surface devices

 

Microsoft Surface: take your pick, from $400 to $3,500

Here’s a look at Microsoft’s Surface hardware sales for the last 5 quarters:

> Q2:18: $1.335 billion

> Q3:18: $1.094 billion

> Q4:18: $1.185 billion

> Q1:19: $1.180 billion

> Q2:19: $1.860 billion

Add up just the last 4 quarters, and you get Surface revenue totaling $5.3 billion.

What’s more, Surface hardware sales were strong across both consumer and commercial customer sectors, Microsoft said.

For a bit of contrast, consider that Microsoft’s Windows OEM pro revenue declined in the quarter by 2%. The company’s Windows OEM non-pro revenue declined by an even worse 11%.

For more contrast, the company’s More Personal Computing group, which includes both Windows and Surface hardware, saw revenue rise in Q2 by 7%, to $130 billion.

Different strokes

And somehow, the processor chip shortage that Microsoft says is hurting its Windows business does not seem to be hurting its own Surface hardware business. Even though its Surface devices are based on the same Intel processors as the other vendors’ Windows 10 devices.

To be sure, the top PC suppliers — Lenovo, HP, Dell, Apple and Acer — sell way, way more devices than Microsoft does. For example, in the last quarter of calendar 2018, Lenovo alone sold more than 16.7 million PC devices worldwide, according to IDC.

By comparison, Microsoft probably sold fewer than 2 million devices in its Q2, assuming an average selling price of about $1,000. That’s just a guess, since Microsoft doesn’t break out the figures. And because starting retail prices for Surface devices range widely, from a low of $400 for the Surface Go to a high of $3,500 for the Surface Studio 2.

Still, Microsoft, the company best known for its PC and server software, now has a multibillion-dollar business in PC hardware. 

 

Blog Category: 
Devices