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Microsoft Says Chip Supply Challenges Hurt Windows

Mark yet another victim of chip shortages: Microsoft's Windows business. The company said in an earnings call last night that Windows OEM results were lower than it had expected because of chip availability for its hardware partners.

"In Windows, the overall PC market was smaller than we expected primarily due to the timing of chip supply to our OEM partners, which constrained an otherwise healthy PC ecosystem and negatively impacted both OEM Pro and non-Pro revenue growth," said Amy Hood, Microsoft's chief financial officer. "Windows OEM Pro revenue declined 2 percent, roughly in line with the commercial PC market. OEM non-Pro revenue declined 11 percent, below the market with continued pressure in the entry-level category."

The lack of OEM Windows sales also meant that consumer sales of Microsoft Office took a hit. Still, Microsoft's "More Personal Computing" business had $13 billion in revenue, which is a 7 percent increase over last quarter boosted by its Surface computers, like the Surface Pro 6 and Surface Laptop 2

In fact, Surface revenue was up 39 percent to $1.86 billion. Its gaming revenue was also up 8 percent, mostly due to Xbox and game services like Xbox Live and Game Pass. 

Microsoft also turned up strong results in Azure (up 76 percent, continuing to be a larger and larger focus for the company) and LinkedIn, which is up 29 percent. Overall, the company had revenue of $32.5 billion and net income of $8.4 billion.

Andrew E. Freedman

Andrew E. Freedman is a senior editor at Tom's Hardware focusing on laptops, desktops and gaming. He also keeps up with the latest news. A lover of all things gaming and tech, his previous work has shown up in Tom's Guide, Laptop Mag, Kotaku, PCMag and Complex. among others. Follow him on Twitter: @FreedmanAE