Microsoft’s Little Victories Add Up As Surface Revenue Falls – Forbes

Microsoft’s Q3 17 earnings (representing the first calendar quarter in 2017) were announced this week, and it shows a fall in revenue from the Surface division of 26% year-on-year to $831 million.

Microsoft should not be too disappointed by this. More sales would be great but for the Surface team sales are not everything. The current strategy around the Surface hardware is not necessarily about selling multiple millions of units every week. Microsoft would never turn the income down if that happened with one of the Surface products, but the value that Surface brings to Microsoft is not financial.

Microsoft Corporate VP of Devices, Panos Panay introduces Microsoft Surface Studio at a Microsoft news conference  (Photo: Don Emmert/AFP/Getty Images)

Take the Surface Studio. It’s highly unlikely that 28-inch screened desk bound computer was going to set the retail world alight with sales. What it did do was set the critical world alight as people were willing to take another look at Microsoft, at Windows 10 and at the potential in the new hardware to be an effective tool.

The Surface Studio may not sell in huge numbers, but it is a clarion call to anyone looking at the ecosystem. It is stylish, it out-Apples Apple, and is built around Microsoft’s Windows 10. In essence the Surface Studio is a marketing campaign to the creatives of the world who are falling out of love with the established Mac market. That there are some sign ups to the Windows Cloud services and associated hardware sales on the side to help offset some of the cost is a bonus, not the primary goal.

That principal of marketing by example holds true right down the line, from the massive Surface Studio, through the stylish Surface Book, to the smaller Surface Pro 4 ultraportables. They are recognisable in the market, they illustrate what Microsoft believes can be done with Windows 10, and they prove new technologies and ideas to Microsoft’s manufacturing partners.

These are the little victories gathered by the Surface hardware. Revenue may be down, but the reward is not the bulking up of the positive side of the balance sheet. The reward is in the perception and alteration of what Windows 10 can achieve, what Microsoft can achieve, and how it can set trends that benefit everyone in the ecosystem.

Now read why Microsoft is selling the Galaxy S8 in its own stores…

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