Microsoft reports weaker Surface and Windows revenues amid global chip shortage

Microsoft released the fourth quarter of its fiscal 2021 financial results today, with revenue of $46.2 billion and net income of $16.5 billion. Sales are up 21 percent and net income is up 47 percent. While cloud and Office services have boosted Microsoft’s revenues, it’s clear that the global chip shortage is taking its toll.

With the PC market experiencing its first major growth in 10 years earlier this year, there have been some signs recently that laptop and PC sales could slow again amid a global chip shortage. Microsoft’s Windows results this quarter reflect that.

The Surface Pro 7 Plus has been on sale for six months now.
Photo by Tom Warren / The Verge

Windows OEM revenues are down three percent, blaming Microsoft on “supply chain constraints. Windows non-pro OEM sales also fell four percent, while Windows OEM Pro sales also fell 2 percent.” .

Microsoft now plans to boost the PC market with the release of Windows 11, which is expected to launch on new devices in October. Windows 11 is a visual overhaul of the operating system, with a new Start menu, updated design, and an overall simplification of Windows.

This recent quarter is also the first time we’ve seen the new Surface Laptop 4 coupled with sales of the Surface Pro 7 Plus impact overall Surface revenue at Microsoft. Surface sales are down 20 percent this quarter, “driven by supply constraints” and a strong quarter of Surface sales over the previous year.

Microsoft’s new Xbox Series consoles are now three-quarters sold.
Photo by Vjeran Pavic / The Verge

Microsoft’s Xbox Series X and Series S consoles are now in the third quarter of sales, having helped grow hardware revenues in recent months. Hardware sales, as expected, rose again by 172 percent. Microsoft’s total gaming revenues are up 11 percent, but Xbox content and services revenues are down four percent. Microsoft cites growth in Xbox Game Pass subscriptions and first-party titles that offset declines in third-party title revenue during a strong quarter from the year before.

Microsoft has not disclosed new Game Pass subscriber numbers after the company revealed in January that it had 18 million subscribers. Microsoft had regularly unveiled Xbox Game Pass songs for the past year, but it’s now been two quarters without updates.

To develop…