Microsoft Surface sales are tanking, Microsoft says

From PC World: With soaring cloud revenues, plunging Windows and device revenues, and a few days into a substantial layoff, Microsoft’s first-quarter results feel a bit like a quote from Dickens.

The best of times: “The next major wave of computing is being born,” as Microsoft reported 31 percent revenue growth in its Intelligent Cloud business, a day after Microsoft invested again in OpenAI and its chat service, ChatGPT. (ChatGPT will run on top of Microsoft’s Azure cloud.) The worst of times: Windows OEM revenue sank 39 percent, thanks to a tanking PC market; Microsoft’s Devices (Surface) revenue fell the same amount, thanks to issues launching products, reduced demand, and success a year ago.

In the end, it all sort of came out in the wash, however, with net income down 12 percent to $16.4 billion and revenue sinking 2 percent to $52.7 billion. Microsoft reported $14.2 billion in revenue in More Personal Computing, its consumer business, down 19 percent, but 18 percent growth to $21.5 billion in Intelligent Cloud and 7 percent growth in Productivity and Business Processes, Microsoft’s Office business.

For Microsoft’s consumer business, however, the quarter was one of Microsoft’s worst. Not only did Devices (formerly called Surface) revenue sink by more than it has in years, Microsoft said that the company had problems launching certain undisclosed Surface devices. (Devices also includes the Xbox, HoloLens, Surface Duo, and its peripherals.) Xbox hardware revenue sank by 13 percent, too. According to Microsoft chief financial officer Amy Hood, the drop in Windows OEM revenue was expected, thanks to a drop in PC sales that Gartner ranked as the worst ever.

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