Microsoft Surface sales slip in otherwise stellar quarter

Sales of Microsoft’s Surface devices were the sole blemish among an otherwise stellar set of quarterly results for the software giant's three months ending 30 September 2019.

Total revenue grew 14 percent in Q1 of 2019 to reach US$33.1 billion, while net income grew 21 percent to $10.7 billion.

The software and cloud giant is picky about which financial figures it releases, but does break out numbers for the Surface brand in general. Surface revenue dropped $44 million, or four percent, due to the timing of the end of three of its flagship products.

Microsoft didn’t have a new Surface device to sell this quarter either, with the latest batch of devices set to go on sale next month.

Every other Microsoft product line saw significant growth.

The productivity and business processes unit, which includes Office 365, LinkedIn and Dynamics, grew 13 percent to hit $1.3 billion.

Office Commercial in particular grew 13 percent, or $807 million, fueled by Office 365 sales, but offset by smaller revenue from on-premises licenses. Revenue from consumer versions of Office grew five percent, or $51 million. Dynamic’s revenue rose 14 percent (no revenue figure was offered for this one), while LinkedIn grew revenue by 25 percent, or $379 million.

The intelligent cloud business, which includes Azure services, server products and GitHub, grew $2.3 billion, or 27 percent. Sever and cloud products in particular grew $2.1 billion, or 30 percent. The growth was driven by Azure’s own 59 percent growth thanks to higher infrastructure-as-a-service and platform-as-a-service sales.

Server revenue grew 12 percent thanks to demand for Microsoft SQL Server 2008 and Windows Server 2008 end-of-support, while enterprise services rose seven percent, or $95 million, due to Premier Support Services growth.

“The world’s leading companies are choosing our cloud to build their digital capability,” said Microsoft CEO Satya Nadella in a press release. “We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity.”

The company will soon host an earnings call, which we expect will include more highlights pertinent to partners.