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Surface, Windows sales hurt by chip shortages

Surface, Windows sales hurt by chip shortages

It's not clear, however, what components were affected.

Credit: Microsoft

Chip shortages have hit one of the world’s largest software companies, Microsoft, and its line-up of Surface PCs.

Redmond reported net income of US$16.5 billion (up 47 per cent from a year ago) on revenue of $46.2 billion, an increase of 21 per cent over the same period. But two key businesses suffered as a result of ongoing supply issues with Surface revenue dropping 20 per cent -- or by $348 million -- to $1.376 billion.

In a statement, Microsoft said the shortfall was driven by “supply chain constraints,” without specifying what those constraints were. Microsoft also said that Windows OEM revenue decreased three per cent, “with continued PC demand impacted by supply chain constraints.”

Microsoft launched the Surface Laptop 4 during the second quarter, a solid notebook. Otherwise, Surface sales were predicated upon the Surface Pro 7+, Microsoft’s latest entrant into the Windows 2-in-1 tablet market.

Interestingly, Microsoft’s other key hardware business, the Xbox game console, was apparently not affected. Microsoft said that division's revenue, driven by the Xbox Series X and Series S, had increased 172 per cent to an undisclosed amount, “driven by higher price and volume of consoles sold.”

Xbox content and services revenue dropped, however, due to a decline in third-party titles, the company said. Also, strong sales during the 2020 pandemic made 2021 look weaker by comparison.

In general, Microsoft’s More Personal Computing segment, which includes PCs and Windows, reported $4.873 billion in operating income, compared to $4.091 billion a year ago.

Revenue climbed from $12.9 billion a year ago to $14.1 billion in the current quarter. Productivity and Business Processes, which includes Office, reported $6.4 billion in operating income, up from $4.0 billion a year ago, on $14.7 billion of revenue.


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