As the quarterly financial results from technology companies roll in, the industry is presented with two similar but contrasting visions of the devices market.
“One is of an expanding market, of an underdog recovering its strength,” claims James Moar, analyst, Juniper Research.
“The other is of record-breaking sales and exceeded expectations in some places, while trying to ignore its decline in others.”
In Cupertino, Apple reported a record 74.5 million iPhones shipped, driven by strong sales in China and other Asian markets.
Over in Redmond, Washington, Microsoft sold a mere 10.5 million Lumias last quarter, while the costs of the Nokia acquisition still make a financial dent in the company’s fortunes.
iPad and Surface
“Other revenue streams tell a different story, and betray how different the two companies are, even if Macs and PCs are now based on very similar hardware,” Moar says.
Apple’s quarterly service revenues sit at $4.8 billion, up just 9% on last quarter, despite the partnership with IBM starting to bear fruit. Meanwhile, Microsoft has increased its commercial cloud revenue by 114% in the same period.
“While the absolute revenue from these services has some way to go to catch up with Apple, Microsoft is becoming a resurgent force in the enterprise,” Moar adds.
According to Moar, productivity is becoming a key focus for tablets, and is driving an increase in hybrid computer use.
“The Surface Pro 3 has revived the Surface line,” Moar claims. “Microsoft notes $1.1 billion in revenue, an increase of almost 25%, after its release.
“This is a very different story for Apple, which didn’t see fit to mention iPads at all in its press release. The reality is a 22% quarter-on-quarter revenue decline for the line, alongside another fall in unit sales.”
Going forward, Moar believes Microsoft has a lot of space to expand the Surface Pro range to the enterprise, while the currently dominant iPad must break into new markets or decline.
“Microsoft’s Surface devices may ultimately suffer a similar fate after several years as longer refresh rates take their toll,” Moar adds, “but by that time they are likely to have a stronger enterprise cloud position, which can then provide strong Cloud-based revenues until device sales pick up again.”