MICROSOFT has missed revenue expectations for the third quarter due to slumping sales of its Surface Pro tablet.
During its fiscal third quarter earnings call on Thursday, Microsoft reported that Surface revenues fell 26 per cent year-on-year, hitting $831m down from $1.1bn, which it was quick to blame on increased competition and "product end-of-lifecycle dynamics."
This ain't all that surprising. The Surface Pro 4 arrived in Blighty back in November 2015, and hasn't seen an upgrade to support Kaby Lake nor USB-C. On the other hand, the likes of Dell and Lenovo have been quick to push out new and improved 2-in-1 devices, making Microsoft's latest offering look somewhat dated.
It's unlikely we'll be seeing a new Surface Pro any time soon, either. Although the firm is holding an event next week, this so-called 'MicrosoftEDU' event is tipped to see the launch of Windows 10 Cloud, the firm's long-rumoured Chrome OS competitor.
This Surface sales slumpage took the shine off of an otherwise bumper third quarter for the company. The firm boasted that cloud revenues were up 11 per cent at $6.8bn, Azure revenues 93 per cent and Office 365 up 45 per cent, with the number of monthly active users topping the 100 million mark.
Cloud revenues rose 11 per cent at $6.8bn, driving largely by Azure growth. Azure revenues were up 93 per cent and its margin improved as well to 51 per cent, up from 48 per cent.Consumer Office revenues were also increased 15 per cent in Q3.
Microsoft's Xbox biz continues to do well, with gaming revenues up 4 per cent year-on-year. The firm said it expects that to increase "significantly" over the next year thanks to the impending launch of its Xbox Project Scorpio console.
The firm's traditional PC biz had a mixed-bag quarter, with revenues down seven per cent to $8.8bn and operating profit up 20 per cent to $2.1bn.
Overall, Microsoft's Q3 revenues hit $22.1bn, up eight per cent year-on-year .However, analysts had been expecting even better revenues and this caused a slight fall in Microsoft shares. µ
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