Microsoft’s Surface business sees a small increase

By: Vamien McKalin
2 minute read

Microsoft earlier released its Q4 earnings for the fiscal year, and things seem to be going well for the most part. The interesting thing about this earnings call is an increase of 9% in Surface revenue.

When Microsoft showed off the first Surface tablet, many were quick to shrug it off as another failure, but the Surface line of devices has proven to be a winner. It is now a billion-dollar business for Microsoft, and we expect it to grow even further due to consumers gravitating towards the 2-in-1 market.

In it press release, Microsoft had the following to say:

Surface revenue increased 9% (up 9% in constant currency) driven by Surface Pro 4 and Surface Book

Devices revenue decreased $782 million or 35%, mainly due to lower revenue from phones, driven by the change in strategy for the phone business, offset in part by higher Surface revenue. Phone revenue decreased $870 million or 71%, driven by a reduction in volume of phones sold. Surface revenue increased $76 million or 9%, primarily driven by the release of Surface Pro 4 and Surface Book in the second quarter of fiscal year 2016, offset in part by a decline in revenue from Surface Pro 3 and Surface 3.

The Surface Book and Surface 4 are premium devices that cost more than what most computer users are willing to spend. Despite that, Microsoft is still successful in the space. Both devices are powered by Windows 10, the company’s latest modern operating system .

What the software giant needs to do in order to keep Surface revenues from falling is to officially announce and release the rumored Surface Phone. The brand is now a powerful one, and we believe it could push its mobile strategy in the right direction — just with little room for mistakes.

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