Gears & Gadgets

Microsoft earnings: Xbox hardware sales shot up 86% with Series X/S

The Xbox Series X, which launched in November.
Enlarge / The Xbox Series X, which launched in November.

Microsoft delivered its earnings report for Q2 2021 yesterday, and the company has continued its sprint of very strong quarters, again driven primarily by Azure and the cloud. But that same old story isn’t the only one here: the report also tells us a thing or two about the new Xbox’s performance, as well as Windows and Office.

Overall, Microsoft beat analyst expectations. The company’s top-level revenue grew 17 percent year over year, reaching $ 43.08 billion. Analysts had expected $ 40.18 billion. $ 14.6 billion of that was from the business segment Microsoft calls “Intelligent Cloud,” which most notably includes Azure but also some other professional services like GitHub.

Cloud wasn’t the only positive story, though. Personal Computing including Windows, Xbox, and Surface grew 15 percent compared to the previous year to just over $ 15 billion. That included an 86 percent increase in Xbox hardware sales, as well as a 40 percent increase in Xbox content and surfaces—the former of those includes the launch of the Xbox Series X/S consoles in November, and the latter includes Game Pass, which Microsoft has been pushing hard as a core value proposition for the Xbox game platform.

It also includes Microsoft’s streaming games service, though that service is still nascent, and it’s unlikely to have had a significant impact on driving those services numbers up.

That said, the cost of producing and marketing the new Xbox actually shrank Microsoft’s margins during the quarter—down from 40 percent to 34.6 percent in that Personal Computing segment.

Windows had a somewhat less impressive quarter, as it was essentially stagnant at 1 percent growth, despite the fact that IDC reported traditional PC sales were way up last quarter. Admittedly, part of the big numbers presented by IDC came from the expansion of ChromeOS beyond the education market and relative growth for Apple’s macOS-based hardware.

There is also the Productivity and Business Segment—including Office and LinkedIn. That, too, grew. Total revenue for the segment was $ 13.35 billion, which means it was up 14 percent.

Microsoft gave somewhat more conservative guidance to investors for the next quarter, with a range between $ 40.35 billion and $ 41.25 billion.

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Tech – Ars Technica

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