Anytime Microsoft has a bad quarter it’s a great time to practice your creative writing skills.
Writing for the very nice people and day trading aficionados and charming contrarians and alien face-huggers at Business Insider, Matt Weinberger has an interesting perspective on Microsoft’s quarterly results that may cause spit-takes so, please, swallow your beverage.
“Microsoft’s Surface hardware business shrunk by $285 million…”
Wait. For. It.
“…and it’s weirdly a good thing for Microsoft.” (Tip o’ the antlers to @realworldrj.)
Awww, no, you dih-unt.
And, yet… he dih-ud.
Last quarter the fact that Surface revenues were down “only 2 percent” was a sign of the Surface’s “resilience”. Now it’s down a whopping 26 percent but it’s a good thing!
The reason for the decline, according to Microsoft: “increased price competition in the premium 2-in-1 category and product end-of-lifecycle dynamics.”
No doubt, that’s not great news for the Surface business. Still, in a weird but real way, it’s good news for Microsoft.
Look, the Macalope has evened with a lot of ridiculous stuff over the years but he seriously can’t even with this. He’s all out of even. When will our elected officials deal with the depleted conditions of our national even reserves? Please sign the online petition.
“Increased price competition” just means that other manufacturers are building their own Surface-style, high-end convertible tablet/PC devices, and selling them for less than Microsoft’s own product lineup.
See, it’s very simple. If Microsoft sells a lot of Surfaces, they’re winning. If, on the other hand, they don’t sell any…
Yes, also winning. Very good. Please pick up your punditry job as you file out.
This would be a problem if, like Apple, Microsoft was a hardware company.
They literally make hardware. Hardware that pundits have been claiming for two quarters is KILLING THE MAC YEEEEAAARRRRGH despite its revenue having declined over that period.
Microsoft finally learned their lesson, that leaving the reputation of their platform up to a bunch of design-challenged OEMs that decided the best way to make money was to load the devices with crapware was no longer tenable. And they were right. Apple and Google have, for better or worse, let everyone expect to get operating systems for free.
But the whole point of the Surface products in the first place was to get PC manufacturers building more touch-friendly, stylus-friendly Windows tablets and computers.
Was that it or was it an attempt to make better Windows products while helping themselves to PC OEMs’ lunch? The amount of bending over backward here to explain away a bad quarter is positively Cirque du Soleilian. Béla Károlyi is going to start shaking a printout of this post in the faces of 8-year-old gymnasts to motivate them.
“Look at Weinberger! He bend like rubber band! You look like someone throw mannequin across mat!”
As Charles Arthur notes, it seems that Microsoft probably didn’t sell more than half a million Surface devices last quarter. It’s most likely a smaller business than the Apple Watch by revenue. And you can’t tell the Macalope taking the small amount of money they make on a Windows OEM license is just as good as taking the big amount they make on a Surface.
None of this is to say the Surface is a bad business or that Microsoft should kill it or anything as hair-pulling as that, it’s just to say they had a bad quarter because they haven’t introduced new devices (other than the Surface Studio which is expensive and constrained), much like Apple. But somehow where Apple is pilloried, pundits fall over themselves trying to excuse the same problem for Microsoft.