Microsoft Revenue: Xbox Hardware Sales Up 86% with Series X/S | GeekComparison

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

Microsoft released its second quarter 2021 earnings report 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 all here: the report also tells us a thing or two about the performance of the new Xbox, as well as Windows and Office.

Overall, Microsoft beat analysts’ 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 came from the business segment that Microsoft calls “Intelligent Cloud”, which 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 year-over-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 services — the former 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 gaming platform.

It also includes Microsoft’s streaming game service, although that service is still in its infancy and unlikely to have had a significant impact on increasing the number of services.

That said, manufacturing and marketing costs for the new Xbox caused Microsoft’s margins to plummet during the quarter — from 40 percent to 34.6 percent in that personal computing segment.

Windows had a slightly less impressive quarter, as it essentially stagnated at 1 percent growth, despite IDC reporting that traditional PC sales were much higher last quarter. Granted, some of the big numbers IDC presented came from ChromeOS’ expansion beyond the education market and the relative growth of Apple’s macOS-based hardware.

There’s also the Productivity and Business segment, including Office and LinkedIn. That too grew. Total revenue for the segment was $13.35 billion, an increase of 14 percent.

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

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