The ups and downs of Microsoft’s Q4

While revenue is up, it’s bad news for Xbox and Windows.

Fourth base

Earlier this week, Microsoft posted its fourth-quarter results, and there’s reason enough for Bill Gates and the gang to keep on smiling. With revenue at $51.9 billion and a net income of $16.7 billion, the good news is that revenue for the tech giant is up by 12%.

Wouldn’t it be great if it was all that easy? Alas, even Gates doesn’t live in a perfect world. Instead, Microsoft has some issues on its hands; namely, Windows and Xbox falling victim to the decline in the PC and hardware markets – which were, obviously, thriving throughout the pandemic.

Scratching the surface

By the looks of it, the wider PC market has taken a real hit. According to Gartner, shipments have seen a 13% decline in the most recent quarter – the sharpest in nine years. But despite the decline, Microsoft’s Surface is doing well commercially, with a 10% increase in revenue for Q4 – a great endorsement of its refreshed compact Surface Laptop Go in June. We’ve now had a decade of Surface. Where does the time go?

Microsoft is also still bullish about its role in gaming, despite overall revenue in the industry falling by 7% year on year. According to Microsoft CEO Satya Nadella, it has “been the market leader in North America for three quarters in a row among next-gen consoles.”

What should you be keeping an eye on? One of the big issues for Microsoft is the ongoing chip shortage that is impacting tech companies everywhere. Due to the tightened supply chain, Intel is planning price increases – and we’re thinking about the impact that this might have on the PC market in particular. If it continues to soften, there could be more bad news for Microsoft – so make sure you’re savvy on where the chips are at, and how other tech companies are dealing with the shortage. Did someone say ‘price hikes’?