Microsoft’s Surface revenue grows despite falling PC and tablet markets
Microsoft (MSFT) has recently launched a number of devices that show it’s serious about capturing a fair share of the PC market. It launched its laptop Surface Book 2 in November last year and its tablet computer Surface Go in August this year. Microsoft’s revenue from its Surface segment rose 14% year-over-year in the last quarter, which Microsoft credits to the success of the Surface Book 2 and the Surface Go.
Revenue growth of 14% is commendable, especially when the overall PC and tablet markets have struggled to grow. According to a report from Gartner, the PC and tablet market could fall ~1.2% in 2018.
The chart above shows how Microsoft’s Surface revenue has steadily grown over the last few quarters. Microsoft experienced exceptional growth in the second quarter of fiscal 2018, as it was the holiday season of 2017.
Microsoft expects an even better holiday period this year with new products
For this year’s holiday season, Microsoft has high expectations from its newly launched Surface Pro 6 and Surface Laptop 2. Despite a good holiday season last year, Microsoft expects an even better holiday season this year, with revenue growth in double digits for its Surface segment. The Surface Pro 6 is a convertible laptop that has Intel’s (INTC) eighth-generation processor, while the Surface Laptop 2 is the latest laptop from Microsoft. The company has also recently launched its all-in-one desktop PC Surface Studio 2, which uses NVIDIA’s (NVDA) chips based on Pascal architecture to boost its graphics performance.
These efforts have helped Microsoft become a prominent player in the PC market. According to Gartner, Microsoft is now the fifth-ranked player in the US PC market behind HP Inc. (HPQ), Dell, Lenovo (LNVGY), and Apple. This is the first time that the company has made it to the list of the top five PC players.