After nearly a decade of steady growth, Microsoft’s revenue from Surface devices fell sharply by $1.8 billion (24%) in 2023, and next year isn’t looking much better, according to experts.
An analyst from the ZDNET platform who followed the fate of this line points out that at the end of fiscal year 2022, the Surface segment generated almost $7 billion in revenue for Microsoft. Given annual revenue growth of 22% over the course of a decade, the gains are even greater. It would have been expected in 2023, but the opposite happened.
According to the corporation’s annual report, “revenue declined as elevated inventory levels added to the company’s weakness amid an overall decline in PC demand.”
According to the expert, back in 2012-2013. “No one in their right mind would have bet” on this division of Microsoft, since the company was forced to write off $900 million in a one-time charge due to the spectacular failure of Surface RT. But already in 2018, the line earned the company almost 5 billion dollars.
What’s more, Surface has seen consistent 22% growth even over the past four years, when worldwide PC shipments remained stagnant or even declined.
And yet, in fiscal 2023, the company had to stop directly indicating actual Surface revenue figures in its reports and opt for indirect figures. For example, comparisons to last year’s revenue are presented in percentage terms. And the “Revenue” item now includes not only Surface sales figures, but also revenue from sales of peripheral devices (keyboards, mice, etc.).
The analyst expects that the decline will continue in 2024 and will be approximately the same 24%, that is, in terms of financial indicators it will return to the level of 2016-2017.
Author:
Ekaterina Alipova
Source: RB
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