Microsoft Surface Stripping Sales From PC Partners Who Move To Cuddle Up With Google
The Microsoft Surface has been a key conflict product for PC retailers such as HP, Acer, Lenovo and ASUS, now these PC Companies are cuddling up to Google by expanding their Chromebook offering into the consumer and education markets.
Sales of Microsoft’s Surface tablets grew 65 percent during the past 12 months. Surface, revenues grew 117 percent to $888 million, driven by Surface Pro 3 and Surface 3, which were launched in June 2014 and May 2015, respectively.
Full-year sales are expected to exceed $3.6 billion.
“This is a Company that expects PC brands to partner with them to sell Microsoft software such as their Windows OS and their Office suite of products and then moves to compete head on with PC brands with their own hardware offering in both the education and consumer markets” said a senior executive at a major PC Company in Sydney.
In fiscal 2014, Surface sales hit $2.19 billion, up from 2013’s less than $1 billion. Executive VP/chief financial officer Amy Hood said enterprise sales accelerated in the quarter and that Surface 3 sales were “particularly strong” to educational customers.
“Our differentiated products, as well as improved discipline and execution, helped to improve gross margins by over $450 million this quarter and $1.3 billion in fiscal 15,” she said.
Microsoft CEO Satya Nadella, “Surface is clearly a product where we’ve gotten the formula right, earned fans, and can apply this formula to other parts of our hardware portfolio.”
Windows Phone revenue fell 68 percent to $552 million, mainly because of $382 million in revenue recognized in the previous year when the company’s commercial agreement with Nokia ended.
Currently Microsoft is working with key retail partners in Australia to expand their in store merchandising for Surface.