Microsoft posted the fourth quarter of its 2022 financial results today, reporting revenue of $51.9 billion and a net income of $16.7 billion. Revenue is up 12 percent, and net income has increased by just 2 percent. But while revenue was up, Microsoft saw some of its core businesses, including Windows and Xbox, start to slip.
The PC market had been thriving throughout the pandemic, but PC shipments experienced a big decline in the recent quarter — nearly 13 percent according to Gartner. It’s the sharpest decline in nine years, thanks to geopolitical tensions, inflation, and continued supply chain challenges.
Microsoft’s Windows OEM revenue, the price PC manufactures pay Microsoft to put Windows on machines, fell 2 percent in Q4, driven by what Microsoft described as “production shutdowns and a deteriorating PC market.”
Photo by Becca Farsace / The Verge
Surface revenue has increased 10 percent for Q4, despite no big Surface launches during the quarter. Microsoft refreshed its compact Surface Laptop Go in June with 11th Gen Intel processor, but we’ll be waiting until the fall until we see a bigger refresh to the Surface lineup. 2022 marks 10 years of Surface, so expect the usual fall event for new devices.
All eyes are now on Intel’s planned price increases of its CPUs and chips, and how they might affect the PC market. Intel is planning price rises for its flagship CPUs and a wide range of other chips later this year, including Wi-Fi and other connectivity chips.
Photo by Vjeran Pavic / The Verge
Over on the Xbox side, hardware revenue is fell 11 percent, alongside a 6 percent dip in Xbox content and services revenue. Microsoft attributed the declines to “lower engagement hours and monetization” across both first- and third-party titles. Last quarter Microsoft revealed 10 million people had used the company’s Xbox Cloud Gaming service, and that’s bound to have grown even higher thanks to Fortnite now being the only game that’s free to stream on the service.
Microsoft hasn’t provided an update on Xbox Game Pass subscribers this quarter, after the service grew to 25 million in January following the holiday releases of Age of Empires IV, Forza Horizon 5, and Halo Infinite.
Microsoft isn’t discussing its planned $68.7 billion acquisition of Activision Blizzard any further today. The purchase is expected to close in fiscal year 2023, and it will see Microsoft publish franchises like Warcraft, Diablo, Overwatch, Call of Duty, and Candy Crush.
Outside of gaming and Windows, Microsoft’s Office, cloud, and server products continue to growth at impressive rates. Office commercial products and cloud services revenue is up 9 percent this quarter, and Office consumer is up 9 year over year. Microsoft 365 Consumer subscriptions are now at 59.7 million, as Microsoft continues to tempt consumers into Office subscriptions and services like Microsoft Teams.
<span class="e-image__image " data-original="https://cdn.vox-cdn.com/uploads/…….