Microsoft just delivered a strong quarter, beating revenue and EPS expectations.
It did this despite a 3% drop on a year-over-year basis for Windows revenue.
We spoke with Chris Suh, general manager of Microsoft’s investor relations about the Windows business.
Basically, consumer PC sales are tanking, but sales to enterprises are strong.
Suh said Windows revenue for consumers was down 20%. Windows revenue for enterprises was up 12%. He said the consumer sales drop was affected by China, where there is an inventory build up. But, even if you don’t include China, the consumer drop is still 14%.
Additionally, Suh said that Surface units doubled on a quarter-over-quarter basis, and revenue for the Surface more than doubled. The Surface business is still tiny in absolute terms, but it’s good to see that it’s growing.
He didn’t provide any guidance on whether corporations are buying Windows 8, or Windows 7 licenses. (If we had to guess, we’d guess Windows 7 is more popular since he didn’t say anything either way. If Windows 8 was hot, Microsoft would want to brag about it. But, this is 100% speculation on our part.)
So, what do we make of this?
Well, it’s not great for Microsoft. In an ideal world, every thing across the board is up by double digits.
But, it’s not that bad, either. Enterprise sales are strong, which is almost neutralising the bad consumer market.
The risk for Microsoft is that eventually what’s slowing down consumer PC sales catches up with its Windows enterprise sales.
But, Microsoft is a highly diversified company, and its overall revenue grew 11% this quarter even with Windows dropping.