The house of cards it has become the Surface division within Microsoft It is collapsing at breakneck speed. In the latest financial results published by the company, those corresponding to the third quarter of fiscal year 2023, an extreme drop in the Surface business can be seen. Although the company has not spoken publicly about it, specialists know that it is not exactly good news.
Since the premiere of Surface technology in 2012, it has not ceased to be the main ugly duckling in the catalog of the entity co-founded by Bill Gates. Although the initial objective was to have a very positive impact on the market, its tablets, computers and other devices They haven’t caught on with consumers.. The data that appears in the latest Microsoft economic report confirms it even more: saving the furniture is going to be complicated.
A drop of 30%
For Microsoft, the fact that the Xbox division has only grown by 3% in the last report is something that cannot be taken as positive. So you just have to imagine the opinion that the executives of the entity have about the result of -30% that has suffered device division, into which Surface integrates. This also does not hide the fact that the benefits of Windows OEM, which is the payments that the company receives for the installation of its operating system on computers sold to the public, have also fallen drastically with -28%.
But the main problem, today, is Surface. These touch devices, which include both tablets and laptops and interactive whiteboards, have not quite taken off. The technology was introduced in its original moment with the Surface RT, a tablet that lacked drive to become a premiere that made history in the Microsoft catalog. Over the years, the company has been determined to continue investing in these devices that are currently powered by the Windows 11 operating system. But many experts believe that Microsoft should begin to be aware of the impasse in which it has gotten.
It is true that there are Surface devices that are interesting, that are well made and are light, but the market simply doesn’t seem interested in them. And when a brand encounters a wall like this, it is difficult for it to end up overcoming it by continuously launching new models. Hence, the division has lost that 30% of sales and is in a critical situation.
Some of the devices included in the Surface range include everything from Surface Pro hybrid tablets to Surface Laptops and Surface Hub slates. As you can imagine, their sales are not especially high. It also doesn’t help that Microsoft’s development team invested in projects that ended up being quietly cancelled, like the dual-screen Surface Duo 3. In addition, it must be added that within the device division, of which Surface is a part and that -30%, PC accessories manufactured by Microsoft and Microsoft HoloLens augmented reality technology are also included. However, the bulk of the division is occupied by Surface, a reality that is impossible to make up in any way.
Other divisions are working
In any case, at Microsoft they remain calm. The main reason for this is that these same financial results have shown that other of its divisions are reaching a high level of success. And so, the losses that Surface has generated have been easily covered thanks to the other products. In this way, for example, we can verify that the office automation business orchestrated around Office 365 has grown by 14% and that the division dedicated to Azure cloud computing has grown by a solid 27%.
It should also be noted that there is growth in the division dedicated to server products, so the figures, in general terms, are not being so bad. In the case of the professional social network LinkedIn, one of the products that Microsoft also has in its possession, revenue growth has been 8%, but the number of sessions has increased by 15%. In addition, LinkedIn is making many changes with the mission of trying to be a social medium used throughout the day by professionals.
With all this it can be seen that Microsoft, in global terms, does not have to worry about revenue, but it does have to start taking decisions about what to do with its Surface division in the future. The situation is not looking good.
