Sign in with
Sign up | Sign in

Surface and Xbox One Hits With Buyers During the Holidays

By - Source: Microsoft | B 23 comments

Microsoft sold a lot of consoles and Surface tablets in the last quarter.

Microsoft reported better-than-expected results for its fiscal second quarter ending December 31, 2013. The company stated that it pulled in $6.56 billion, up from the $6.38 billion the company made in the same quarter last year. Revenue was also $24.52 billion, up 14 percent year over year.

"Our Commercial segment continues to outpace the overall market, and our Devices and Consumer segment had a great holiday quarter," said Microsoft CEO Steve Ballmer. "The investments we are making in devices and services that deliver high-value experiences to our customers, and the work we are doing with our partners, are driving strong results and positioning us well for long-term growth."

According to the financial report, Surface revenue more than doubled sequentially, from $400 million in the first quarter to $893 million in the second quarter. The Xbox business was rather kind to Microsoft as well, with 3.9 million Xbox One consoles sold and 3.5 million Xbox 360 consoles sold.

Check out what we thought of the Xbox One in our review here.

Microsoft reported that its Windows OEM revenue declined 3 percent (consumer), reflecting a strong 12 percent growth in Windows OEM Pro revenue (enterprise), offset by continued softness in the consumer PC market. Unfortunately, the company didn't reveal which sold better, Windows 7 or Windows 8.

Bing also saw growth, taking 18.2 percent of the search market and the revenue stemming from Bing advertisements growing to 34 percent. Overall, the Devices and Consumer revenue grew 13 percent to $11.91 billion.

"We delivered record revenue as demand for our business offerings remains high and we made strong progress in our Devices and Consumer segment,"  said Amy Hood, chief financial officer at Microsoft. "These results reflect our focus on execution, cost discipline, and long-term shareholder value as we continue to drive the strategic transformation of the company."

On a commercial level, revenue grew 10 percent to $12.67 billion. Office 365 commercial seats and Azure customers both grew triple-digits, and commercial cloud services revenue more than doubled.

Display 23 Comments.
This thread is closed for comments
  • 1 Hide
    thdarkshadow , January 27, 2014 3:42 PM
    Is there a number for PS4s sold? I am just curious how their sales compare
  • -4 Hide
    JD88 , January 27, 2014 5:20 PM
    They failed to mention they spent more on the Surface than they took in. Surface division costed MS something like $940 million due to low margins and an extremely high advertising budget for a net loss of around $40 million.

    Those OEM Windows numbers are also troubling.
  • 5 Hide
    back_by_demand , January 28, 2014 4:30 AM
    Quote:
    They failed to mention they spent more on the Surface than they took in. Surface division costed MS something like $940 million due to low margins and an extremely high advertising budget for a net loss of around $40 million. Those OEM Windows numbers are also troubling.
    MS has big pockets and lots of patience, probably only IBM is better at playing the long game. Exactly the same could have been said with the outlay in the first couple of years of the original Xbox. If they keep getting serious market penetration they the advertising costs can basically be swept into the margins as it helps to advertise all their other products (OneDrive, Office, etc). I'm sure Apple were saying exactly the same thing about Android just before it exploded.
  • 5 Hide
    damianrobertjones , January 28, 2014 4:57 AM
    Heck... I'm rocking a Surface Pro 2 with the 512GB mSata drive. Sure, yeah, I should have waited for the 4300u CPU update but it looked far too sexy to pass. Nice machine
  • 1 Hide
    stevejnb , January 28, 2014 5:06 AM
    Ironically, I was going to chime in similarly to Back. At this rate, it will take them *far* less time to get returns on their tablet division than it took to get returns on the XBOX division - and that is now looked at as one of their most successful endeavours. Also, saying "well, it's been two years and still no profit!" is a very, very short sighted statement - did anyone really expect a break in to a saturated and competitive market in a large way without eating some losses for a few years?

    I wouldn't even call OEM numbers troubling so much as expected. Precisely that general trend is what moved them towards becoming a "devices and services" company, and the future likelihood of web OS's being a major thing - something you have pointed out yourself many times JDS - makes this, again, quite expected. MS is battening down the hatches and changing course to compensate for this already noticeable trend... We'll see if it works long term. As it stands, this is a good sign their Surface line is headed in the right direction - though I personally think that, while it's a good product, it is generally overpriced.
  • 1 Hide
    Sakkura , January 28, 2014 6:00 AM
    Quote:
    Bing also saw growth, taking 18.2 percent of the search market and the revenue stemming from Bing advertisements growing to 34 percent. Overall, the Devices and Consumer revenue grew 13 percent to $11.91 billion.

    The Bing advertisement revenue grew BY 34 percent, not TO 34 percent.
  • 0 Hide
    bubbathaluva , January 28, 2014 7:30 AM
    I'm sure we'll hear from Apple fanboys about how these numbers aren't a true indication of how well MS is doing. I'm sure PS4 fans will chime in with the same. Here's the reality.... XB & PS are still neck and neck with units sold over equal amount of days released. Both consoles are virtually the same as far as graphics and processing power. The only thing that sets either of the two apart are the software that runs them and more importantly how well the software integrates into the rest of your living room/entertainment hub/home theater. I've played with both companies consoles from their original versions. Microsoft creates the most seamless experience in terms of media sharing, game playing, tracking achievements and multiplayer games. Couple that with how well Windows 8.1 has finally made it easy for multiple PC's on the same network to share files, media, printers and other devices. Yes, Apple has been making it easy for years. MS has tried for years and it has been doable for a while, but not very easy or user-friendly. 8.1 has made it user-friendly and easy. I've used the base level Surface RT and for the money, it is an amazing piece of hardware. Once MS's phone OS is fully integrated into that seamless home network scheme, I'll very likely transition away from all Android. That's saying a lot considering how much I have loved my Android devices.
  • 0 Hide
    Sakkura , January 28, 2014 10:05 AM
    Quote:
    Here's the reality.... XB & PS are still neck and neck with units sold over equal amount of days released.

    PS4 had sold 4.2 million units as of December 28, 2013. Xbox One had sold 3.9 million units as of January 23, 2014. That's 95k PS4 sales per day and 62k Xbox One sales per day.
  • 0 Hide
    bubbathaluva , January 28, 2014 12:58 PM
    Sakkura, thank you for supporting my argument. Looks neck and neck to me. When the amount of units number in the millions and the distance between the two are in the thousands, that's what we mean by neck and neck. Give it another year and see if PS4 is still leading my .3 million units. Either way, lots of people are already trying to call PS4 the winner of a battle that really doesn't even exist. Both companies are trying to make money and both companies are making money.
  • 0 Hide
    bubbathaluva , January 28, 2014 1:07 PM
    By the way, here's some math for you...4.2 million x $400 = 1.68 billion3.9 million x $500 = 1.95 billionWho's winning this race again? Prices of the XB1 will most likely drop by next Christmas, thus eliminating the biggest advantage the PS4 had.
  • 0 Hide
    Sakkura , January 28, 2014 1:26 PM
    Quote:
    Sakkura, thank you for supporting my argument. Looks neck and neck to me. When the amount of units number in the millions and the distance between the two are in the thousands, that's what we mean by neck and neck. Give it another year and see if PS4 is still leading my .3 million units. Either way, lots of people are already trying to call PS4 the winner of a battle that really doesn't even exist. Both companies are trying to make money and both companies are making money.

    The distance is in the tens of thousands PER DAY. At that rate, after a single year the difference would be 12 million units. Most likely will be less because sales of both consoles will slow down, but still - the PS4 has outsold the Xbox One 3:2 so far.
  • 0 Hide
    bubbathaluva , January 28, 2014 1:39 PM
    I suppose we can twist the numbers to support any argument. PS4 wins with units, MS wins with total revenue. We could also divide the sales by market saturation. PS4 is selling in way more countries than XB1 so the argument could be said that if MS was for sale in the same markets PS4 was in, MS would likely be winning. Again, we're in the first 3 months of a 5-7 year life-span of the consoles. Way too early for PS4 fanboys to be calling a winner.
  • -1 Hide
    antilycus , January 28, 2014 6:19 PM
    stop the console war crap. This is the last year for consoles. Everything will be "streamed" (live TV) from these computers in a box called consoles. Personanlly I think that NVIDIA and AMD will release streaming servers (NVidia already has GRID) so these 300+USD chipsets called GPU's won't kill the consumers. Onlive isn't far off, they just need more games and less support for XBOX only controllers. Let's put that into perspective. Lets say ONLIVE comes up with games that look BETTER thtan the next consoles, next year, for 15 a month and your $50 OUYA playeer can use it.... the big 3 don't stand a chance and developers get UNLIMITED power to do what they want with on GPU/CPU power.
  • 0 Hide
    JD88 , January 28, 2014 7:26 PM
    Quote:
    Ironically, I was going to chime in similarly to Back. At this rate, it will take them *far* less time to get returns on their tablet division than it took to get returns on the XBOX division - and that is now looked at as one of their most successful endeavours. Also, saying "well, it's been two years and still no profit!" is a very, very short sighted statement - did anyone really expect a break in to a saturated and competitive market in a large way without eating some losses for a few years?

    I wouldn't even call OEM numbers troubling so much as expected. Precisely that general trend is what moved them towards becoming a "devices and services" company, and the future likelihood of web OS's being a major thing - something you have pointed out yourself many times JDS - makes this, again, quite expected. MS is battening down the hatches and changing course to compensate for this already noticeable trend... We'll see if it works long term. As it stands, this is a good sign their Surface line is headed in the right direction - though I personally think that, while it's a good product, it is generally overpriced.


    I agree for the most part. I really think the Surface could do a lot better if it had full Win 8 on it, but that's rehashing an old argument.

    I was in Best Buy the other day looking at computers in all forms with my Fiance. She needs a Windows machine to use ONE obscure legacy program for a class. She liked some things about the Surface, but it was out immediately due to lack of x86 compatibility. She likes to use her PC on her lap in bed so the keyboard and stand design were also not great. I still think a clam-shell type docking setup is a lot more functional.

    The build quality on the thing was actually pretty good though. A bit bulky when compared to something like the iPad Air, but it felt sturdy. Much better than the Asus T100 which we will probably end up getting. Where I think the Surface is overpriced is the keyboard. An extra $80-100 is frankly nuts. If it included one cover of your choice at the $450 price point it might not be so bad. At $450 with the keyboard, this thing could be cross shopped with the Air. At $550 with keyboard dock, it's really not a good value. Someone could buy a Chromebook, Nexus 7, and Moto G for that.

    I'm not crazy about the T100, but it seemed to get the job done at a decent price. Plus the design of it makes sense.

  • 1 Hide
    JD88 , January 28, 2014 7:33 PM
    Quote:
    Quote:
    They failed to mention they spent more on the Surface than they took in. Surface division costed MS something like $940 million due to low margins and an extremely high advertising budget for a net loss of around $40 million. Those OEM Windows numbers are also troubling.
    MS has big pockets and lots of patience, probably only IBM is better at playing the long game. Exactly the same could have been said with the outlay in the first couple of years of the original Xbox. If they keep getting serious market penetration they the advertising costs can basically be swept into the margins as it helps to advertise all their other products (OneDrive, Office, etc). I'm sure Apple were saying exactly the same thing about Android just before it exploded.


    The Xbox division is still barely profitable 10 years later. It certainly is a long game. In fact, last time I checked Microsoft was making more money off Android licensing fees than it was the Xbox division on average. Microsoft isn't going away anytime soon, but its days of dominating consumer PCs are over. It will continue to thrive in the business world though as long as its next operating system doesn't alienate the business market like 8 has. They got off pretty easy this time as most businesses had just upgraded to 7 and didn't need to get 8. With 9, businesses will be looking for an upgrade and not one that puts a tablet OS in front of their employees.

  • 0 Hide
    10tacle , January 30, 2014 8:44 PM
    Quote:
    ...This is the last year for consoles. Everything will be "streamed" (live TV) from these computers in a box called consoles.. Lets say ONLIVE comes up with games that look BETTER thtan the next consoles, next year, for 15 a month and your $50 OUYA playeer can use it.... the big 3 don't stand a chance and developers get UNLIMITED power to do what they want with on GPU/CPU power.


    And you REALLY believe that, huh? Clearly you have never dealt with streaming games and tried to play online with players who all have different ISP speeds. And I assume you are referring to that same "ONLIVE" that was originally forecast to be worth nearly $2 billion (US) two years ago and sold for just a few million after laying everyone off. Oh and good luck with streaming true 1080p-developed games, let alone in the future 4K games where the next major revolution will occur with consoles (yes, you can bank on the fact that the "big three" are already working on their next generation consoles).

  • 0 Hide
    back_by_demand , January 30, 2014 11:07 PM
    JD88, Amazon is barely profitable too but its all about market penetration and leveraging it. Xbox can afford to make minimal profits as long as it stays right up there as a top console. Cross selling other services and products is also key, but seriously you think MS is doing bad?
  • 0 Hide
    JD88 , January 30, 2014 11:20 PM
    Quote:
    JD88, Amazon is barely profitable too but its all about market penetration and leveraging it. Xbox can afford to make minimal profits as long as it stays right up there as a top console. Cross selling other services and products is also key, but seriously you think MS is doing bad?


    No. Microsoft is fine. At least for the next 5 years or so. Anyone saying they are dead is living in a fantasy world. My only point is that I think they missed a big opportunity with the Surface. I really think it could have been a hit had it been priced right and were running the correct OS. Then again, they are taking a loss on each one. My guess is a lot of that is due to advertising expenses and not manufacturing cost.
  • 0 Hide
    back_by_demand , January 31, 2014 1:27 AM
    As a first device breaking into a healthy market it was always going to be an uphill battle, but the cost of not trying at all could be even higher in the long term.
  • 0 Hide
    Sakkura , January 31, 2014 7:43 AM
    Quote:
    No. Microsoft is fine. At least for the next 5 years or so. Anyone saying they are dead is living in a fantasy world. My only point is that I think they missed a big opportunity with the Surface. I really think it could have been a hit had it been priced right and were running the correct OS. Then again, they are taking a loss on each one. My guess is a lot of that is due to advertising expenses and not manufacturing cost.

    The Surface Pro is the device to look at there, and it is AFAIK doing better than the Surface not-Pro. IMO what they did wrong was split the Surface brand between two very different devices. The criticism of the Surface not-Pro rubbed off on the much better Surface Pro.
Display more comments