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How Microsoft’s More Personal Computing Segment Has Performed

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More Personal Computing revenue exceeds estimates

Previously, we discussed Microsoft’s (MSFT) Intelligent Cloud segment’s performance in 3Q18. In this part, we’ll look at its MPC (More Personal Computing) segment, which derives most of its revenue from the PC (personal computer) market. Windows OS licensing, hardware, and devices, including Surface, HoloLens, and gaming products such as Xbox consoles, make up this segment.

Microsoft’s MPC segment’s revenue grew 13% to $9.9 billion in fiscal 2Q18, exceeding analysts’ expectation of $9.3 billion. Notably, the segment grew despite global PC shipments falling 4.1% in calendar 1Q18, as reported by Gartner. Calendar 1Q18 marked a 14th straight quarter of PC market decline.

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Growth in Microsoft’s MPC segment is important, as this segment accounted for ~37% of the company’s overall quarterly revenue in 3Q18. In the first nine months of fiscal 2018, MPC revenue stood at $31.5 billion, comprising ~39% of the company’s total revenue of $80.3 billion. In fiscal 4Q18, Microsoft expects its MPC revenue to grow 13% to $10.3 billion–$10.6 billion.

Subsegments that drove growth

Despite continued PC market sluggishness, better-than-expected results from Surface, Search, Windows, and gaming boosted the MPC segment in 3Q18. Microsoft’s Windows OEM (original equipment manufacturer) segment grew 4%, with OEM Pro revenue growing 11% and Windows commercial product and cloud service revenue surging 21%.

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