Microsoft’s Surface Growth Drops Four Percent in Q1 FY20


Matthew Adams
by Matthew Adams
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Microsoft has just released its Q1 (quarter one) FY20 (fiscal year 2020) financial statement. Although the figures are for the Q3 2019 period July to September, they represent the first three months of Microsoft’s 2020 fiscal year. The company’s latest financial report is once again generally encouraging for Microsoft, with the exception of declining Surface growth.

The most encouraging figure on Microsoft’s Q1 FY20 financial report is the overall revenue total. Microsoft’s total revenue for the period amounts to $33.1 billion. That represents a 14 percent increase on Q1 FY19’s overall turnover figure. It also amounts to a net profit of approximately $10.7 billion for the big M.

The Q1 report highlights that Microsoft’s cloud services and Azure cloud computing are once again the big M’s biggest assets. Azure revenue has had the largest overall percentage growth compared with last year’s corresponding period, which amounts to a 59 percent increase. However, that Azure growth figure is still down from the 64 percent of the previous quarter.

Only two of the 14 product and service categories on Microsoft’s Q1 FY20 statement did not see any percentage growth on last year’s corresponding Q1. The Surface device category’s growth has dropped by four percent. Thus, Surface sales have declined in 2019.

Microsoft’s Xbox content and services revenue has also stagnated during Q1 FY20. The Xbox content category has a zero percentage change figure. Microsoft attributes slowing Xbox One sales to the upcoming Project Scarlett console the company plans to release in 2020.

The decline in Surface revenue shows that Microsoft has released new Surface devices at just the right time during October 2019. The big M has just released the Surface Laptop 3 in October 2019. The company also announced the Surface 7 two-in-one laptop and Surface Pro X at its October hardware event. Those new laptops should give the Surface line a considerable boost for the rest of Microsoft’s FY20.

With the exception of the Surface and Xbox figures, however, Microsoft’s latest financial report is a rosy one for the company. The 2019 fiscal year was a record breaker for the big M, and most of the company’s product categories are sustaining decent growth rates in the first quarter of FY20. So, Microsoft is booming primarily thanks to Azure and its thriving cloud markets.

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