Microsoft Now Makes Money From Surface Line, Q1 Sales Reach Almost $1 Billion

SmartAboutThings writes Microsoft has recently published its Q1 fiscal 2015 earnings report, disclosing that it has made $4.5 billion in net income on $23.20 billion in revenue. According to the report, revenue has increased by $4.67 billion, compared to $18.53 billion from the same period last year. However, net income has decreased 14 percent compared to last year's $5.24 billion mainly because of the $1.14 billion cost associated with the integration and restructuring expenses related to the Nokia acquisition.

But what's finally good news for the company is that the Surface gross margin was positive this quarter, which means the company finally starts making money on Surface sales. Microsoft didn't yet reveal Surface sales, but we know that Surface revenue was $908 million this quarter, up a massive 127 percent from the $400 million this time last year. However, if we assume that the average spent amount on the purchase of this year's Surface Pro 3 was around $1000, then we have less than 1 million units sold, which isn't that impressive, but it's a good start.

Comments

Those bastards?

[Anonymous Coward]

They also "make money" at $20 per Android phone, even though they wrote **NONE** of the software. And the list of bogus software patents is public now, it's all crap. Screw them and their thievery.

Gross margin?

[whoever57]

But what's finally good news for the company is that the Surface gross margin was positive this quarter, which means the company finally starts making money on Surface sales.

I think that someone doesn't understand accounting very well. Thre are all kinds of real costs that don't get factored into the gross, so this report does not show whether or not Microsoft is actually making money on Surface sales. For example, all that advertising cost.

Re: Did they make money on Surface?

[_xeno_]

I'm not sure the Surface Pro line is really competing with the iPad, though. I mean, according to Microsoft themselves, a Surface Pro 3 is equivalent to a MacBook Air.

(Disclaimer: I own a Surface Pro 3. They're probably right to compare it to the MacBook Air and not the iPad. I know everyone hates the "tablet UI" on the desktop but even with the Surface Pro 3 their tablet UI is still pretty terrible. I pretty much never leave the desktop. On my tablet. The few tablet-style apps I've tried for the Surface has all been terrible. It really does make a descent small Windows laptop, though!)

Re: Did they make money on Surface?

[_xeno_]

Honestly, that's because that's what it is. It makes a much better competitor to the MacBook Air than the iPad. (The price point doesn't help it either.) It makes a fairly lousy tablet, and it suffers from the general Windows 8-ism of "throw absolutely everything we can think of into it at once."

It's a multi-touch tablet. With an optional-but-not-really keyboard-touchpad cover. And a front and rear camera. And a pen that doesn't attach anywhere. (Fun game: in Surface ads, watch for them to produce and disappear the pen. It comes out of nowhere and disappears to nowhere.)

It runs a laptop OS (and runs it well, mind you) and therefore picks up some annoying laptop-isms: by default, unlocking requires your Windows password. (You can, thankfully, enable a PIN to unlock.) Like a laptop, it enters hibernation mode and then requires a couple of seconds to wake up if you leave it alone long enough. It also takes a couple of seconds to wake up from sleep (not hibernation).

As a small form-factor laptop, it works quite well. As a tablet - well, Windows 8.1 turns out to make a lousy tablet OS.

Although I find that using touch on desktop apps works surprisingly well. The handwriting support is also fairly good and you can get away with using just the pen in a surprising number of desktop apps.

It honestly isn't a bad whatever it is. It's just that it isn't really a good tablet.