Was Microsoft's Surface revenue disappointing during the 2022 pandemic? Don't overthink it.

Source: Daniel Rubino / Windows Key

Microsoft reported for the start time that Surface revenue had exceeded $2 billion last quarter. Nosotros always see a big uptick in the Q2 results considering they follow the US holiday push button where discounts are often offered to ramp upwards volume. Compared to last year, Microsoft was up 3 percent, which is in line with Surface's growth over the last few years.

It's a nice number, $2 billion, although information technology pales compared to Dell (~ $11 billion), HP (~$x.5 billion), and Lenovo (~$14 billion), which take vastly larger production, distribution, and product lines from Microsoft.

But should we have expected an even more than significant number from Microsoft due to the ongoing pandemic and push for Piece of work from Home (WF) and Study from Dwelling house (SFH) marketplace changes?

Not really. Here'south why.

These are not the aforementioned

Dont compare revenue to PC shipments

Source: Daniel Rubino / Windows Central

I've seen some people toss around IDC's "upward 13 per centum" number for year-over-year shipments (302 million) in PCs as a reference signal, suggesting Microsoft's 3 percentage increase seems low. This comparison is strange for a few reasons.

For one, Microsoft is reporting revenue, not shipments, which is what IDC is estimating. Revenue can vary depending on the product's price point and volume mix. Microsoft could take sold fewer but more expensive Surfaces (like Surface Studio ii) or many lower-cost ones (Surface Become 2). We do non know because Microsoft never breaks those figures out to the public.

2nd, IDC's numbers are non appropriate for this assessment anyhow because it includes Google Chromebooks. Chromebooks practice compete against Windows PCs, but information technology is a split up argument if you are challenging Surface PC sales compared to the rest of the Windows PC segment.

Going past rival firm Gartner's numbers, which does not count Chromebooks, information technology is estimated that 275 million PCs shipped in 2022, a 4.8 percent increase year over twelvemonth.

That'due south a bit more sobering.

Of course, I just established that comparing an estimate of yearly PC shipments to quarterly revenue is a non-starter making the point moot anyway.

The takeaway, though, is meaning: Windows PC sales were upwardly in 2022, just it is non a massive resurgence (and Chromebooks played a large role, too). Information technology'southward a bump in a marketplace that has been apartment or failing for years. I of the reasons PC sales were above-average in 2022 and 2022 had nada to practice with the pandemic, merely rather End of Support for Windows 7, where enterprise scooped upwards new hardware.

It's a bump non a tsunami

The pandemic rush is about depression-cost devices, not loftier-end

Source: Daniel Rubino / Windows Primal

I don't think I take ever written a single review of a Microsoft Surface product where people didn't complain about the price existence too high. It'due south a running joke here at Windows Central that when Surface Pro 12 and Surface Laptop half dozen come out, we can already anticipate reader comments moaning that they're too expensive.

The fact is, Surface is premium, and similar Apple devices, they often run higher than what some people consider a good value. Microsoft has been getting more than aggressive in pricing these last few years (moving away from Windows 10 Pro to Home shaved off $100 beyond the board), but Surfaces are still pricier than comparable devices from the large three: HP, Dell, and Lenovo.

That'southward a proficient thing. If Microsoft were suddenly undercutting HP, Dell, Lenovo, not to mention Acer, ASUS, Razer, MSI, and others, I am sure its "partners" would not exist happy near it. Microsoft already runs a fine line between trying to fix the bar and angering its hardware colleagues.

I bring this all up because the production mix which sold the nigh during this pandemic were lower-cost devices. Information technology was students, who all of a sudden had to written report from home, who needed dedicated school PCs. Schools used to share laptops amongst students, merely now they had to exist one-to-1. And guess what – they were not buying Surface Book 3s, but rather more affordable options from HP, Dell, and Lenovo, who specialize in offering various products and on-site support.

Enquiry house Gartner reported on this tendency in January:

PCs have resurfaced as an essential device every bit consumers, including younger children, are relying on them to for work, school, socializing and be entertained from their homes.

For example, Lenovo sells the IdeaPad 1 and Windows 10 Dwelling house in South Style for $200. HP merely announced its ProBook x360 11 G7. Dell has the $539 Breadth 3190 2-in-1. And we just saw refreshed EDU laptops starting at $185 announced a few days ago.

On top of this, HP'due south consumer line (Pavilion, Envy) and Dell's (Inspiron) also fill the gaps for non-education devices.

Looking at 2022, Microsoft released Surface Get 2, Surface Laptop Go, Surface Volume 3, Surface Duo, and refreshed Surface Pro X (SQ2). Of those, Surface Go 2 and Surface Laptop Get are the merely ones remotely closes to being budget-friendly for schools or homes that needed an additional computer. Microsoft likely sold more Surface Laptop Go PCs than Surface Laptop 3s, but the turn a profit margins are much slimmer than something similar Surface Studio 2: sell more than, make less.

That is non to say information technology was all low-cost devices that sold in 2022. Gaming PCs for the home as well went upwardly due to the amusement value needed while being stuck in pseudo-quarantine. Here, Surface does not compete, simply Microsoft does with Xbox, which did see massive gains tied to the hugely successful launch of Xbox Serial S and Xbox Series X.

It's coin in the banking concern either manner

Surface rev is OK, Windows ten Dwelling rev is way up

Source: Daniel Rubino / Windows Central

Finally, while the Surface line probable did not do good from what the market demanded in 2022 (exceptions for Laptop Go and Go 2), Microsoft still wins out.

Revenue from sales of Windows x Dwelling house licenses was upwards a staggering 24 percent year over year. And who bought those Windows 10 Home licenses? The aforementioned OEMs that make lower-price laptops for instruction and consumer markets: Dell, HP, Lenovo, and Acer.

In the end, it is all coin in the depository financial institution to Microsoft, no matter if it goes to Surface or Windows. The only important takeaway regarding Surface revenue is information technology is consistent and growing year over year. Everything else is just a distraction.

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Source: https://www.windowscentral.com/surface-revenue-2020-not-disappointing

Posted by: jorgensenbouselt.blogspot.com

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