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Microsoft Surface Sales Boom As Xbox Crashes

Microsoft who has lifted sales of their Surface PC’s in Australia during the last quarter from 16,000 units to over 24,000 units according to IDC sources has reported record global sales, driven by continued strong growth in its cloud-computing business which includes growing demand for Office 365 software.

Revenue rose 14% to $36.9 billion, beating analysts’ expectations of $35.67 billion, this saw Microsoft’s shares, which have risen 63% over the past year, climb 1.9% in after-hours trading.

Globally both Surface and Office revenues were up are and revenue from Windows licenses has also increased just as Windows 7 support comes to an end.

Gaming revenue is down a massive 21 percent, and Microsoft is blaming some of that on a strong quarter of a third-party game last year.

Microsoft’s Surface revenue which is being driven by incentives to retailers in Australia to sell their product over product from the likes of Lenovo, Dell and Hewlett Packard jumped massively during the same quarter a year ago, on the back of a Surface Pro 6, Surface Laptop 2, Surface Studio 2, and Surface Headphones launch.

It pushed Surface closer to a $2 billion business. This year, Surface revenue has also increased by 6 percent to $1.9 billion.

According to IDC sources in Australia several brands are struggling to compete up against the rebate model that incentivises retailers to support the Microsoft offering.

Retailers in Australia also benefitted after Microsoft launched its new Surface Pro X device with an ARM-based Qualcomm SQ1 processor inside, and a major refresh of the Surface line up.

The Surface Pro 7 got the latest Intel processors and USB-C, while the Surface Laptop 3 got a new 15-inch model (with AMD processors), USB-C, and options for metal or fabric finishes.

In the next quarter Microsoft Australia will launch new Surface Earbuds and later new Surface Book and Surface Go models according to Microsoft sources.

Also coming are new dual-screen Surface Neo and Surface Duo devices according to Microsoft’s PR agency.

The big letdown for the software giant is the slump in Xbox sales with the Company set to release a new Xbox Series X console later this year.

This will drive sales at the likes of JB Hi Fi who are benefitting from their relationship with Microsoft.

Overall gaming revenue has decreased 21 percent for the recent quarter. Microsoft admitted that Xbox content and services revenue also decreased by 11 percent, primarily due to a “third-party title” (likely Fortnite) performing better last year.

Subscription growth has partially offset this decrease, but clearly the third-party game boosted Xbox content revenue last year.

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