As expected, Microsoft’s MPC segment fell
Microsoft’s (MSFT) MPC (more personal computing) segment derives the majority of its revenues from the PC (personal computing) market. This segment encompasses Windows OS (operating system) licensing, hardware, and devices including Surface, HoloLens, Lumia, and Windows phones, and gaming products like Xbox consoles.
Microsoft’s MPC segment’s revenues fell 2% to $8.8 billion in fiscal 3Q17. In constant currency terms, this decline was 1%. As expected, continued sluggishness in the PC market, wherein calendar 2Q17 marked the 11th consecutive quarter of declines in PC shipments, impacted the MPC segment.
MPC is a drag on MSFT’s overall performance
The flailing PC market, however, had a minimal impact on Microsoft’s MPC segment. Windows OEM Pro, which derives its revenue from the business PC market, saw its revenues grow 3% in 2Q17. A higher revenue mix of premium SKUs (stock keeping units) drove this growth.
According to Microsoft, this growth happened as both its “commercial and consumer OEM businesses were slightly ahead of the PC market.” Surface revenues fell 2% due to product cycle transitions, and while gaming revenue fell 14% to ~$1.7 billion, Microsoft noted that its “gaming business is now more than $9 billion.”
In fiscal 2017, this segment fell 4%, reporting ~$38.8 billion in revenues and contributing 43% to overall revenues. Although Microsoft’s cloud offerings have reported impressive growth, the MPC segment continues to be a drag on the company’s performance.