Microsoft's Surface and Xbox Sales are Declining

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Microsoft has published its earnings report for the first quarter of FY 2020, and there are some surprises in there. For starters, the company is reporting that its Surface revenues have decreased by almost 4% this quarter. The Redmond giant is blaming this decrease in sales and revenue on the “timing of product lifecycle transitions”.

It’s noteworthy that Microsoft didn’t refresh anything in its Surface line-up during this quarter, as compared to the same period last year, where Microsoft had released the Surface Go, thereby boosting sales.

The company has recently launched a slew of Surface devices including the Surface Pro 7, the Surface Pro X, the Surface Laptop 3, and will also be launching the Surface Earbuds later this year. It would be interesting to see how these new additions to the Surface family impact sales and revenue when the company releases its earnings details for the next quarter.

Microsoft also saw Xbox sales decline, reporting a revenue drop of 7% as compared to the same quarter last year. The company has been trying to boost Xbox and gaming revenue with subscriptions like the Xbox Live Gold pass, and Xbox Game Pass, but so far it doesn’t seem like those have made a big difference to the company. That said, revenue from these sources might pick up soon, so we’ll keep an eye out for Xbox revenue when Microsoft reveals its earnings report next quarter.

On the other hand, the company saw solid revenue boosts thanks to its Office products and Cloud services. The company reported that Office revenue jumped 13% year over year, and the number of Office 365 subscribers has grown over 30% year over year, standing at a solid 200 million subscribers. Azure also saw a revenue jump of a whopping 59% signalling solid growth for the company in the cloud segment where it competes against other industry behemoths like Amazon and Google.

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