In its most recent quarter, Microsoft sold 10.5 million Lumia handsets, and the Surface line generated $1.1 billion in revenue. Both figures are all-time highs.
Microsoft did break out total phone revenue — $2.3 billion, down from $2.6 billion in the sequentially preceding quarter — but that figure includes the sale of tens of millions of dumbphones, so it’s slightly polluted.
Measuring v. Measuring
When it comes to Windows Phone and Surface, what we care about is volume for the first, and revenue for the second. It comes down to a matter of scale: Lumia handsets are pretty much the only variety of Windows Phone that sells at the moment; Surface volume compared to the PC market is minute, but it could be a decent business for Microsoft — the higher its revenue, likely, the closer it can reach the break even point.
In short, Microsoft cares more about building mobile market share — every Lumia device it sells brings a user either into its services and software orbit, or binds a user more tightly into its ecosystem — than short-term revenue from phones.
The opposite is true for Surface, which was never designed to either be the core nexus point for the Tablets+Windows equation — that was always going to rest with devices built by third parties that ship with the company’s software. So, for Surface, showing growing revenue is the key metric. Microsoft does not break out Surface unit volume, unsurprisingly, but happily it reports the more important of that figure, the project’s top line.
Modest Sequential Growth
In short, the two product lines put up record numbers that were up on a sequential and year-over-year basis. But how strong were the gains?
Surface grew its revenue by $200 million or so during the quarter, on a sequential basis, and 1.2 million more Lumia handsets when measured in the same way. So, Surface revenue was up just over 20 percent when compared to the company’s preceding fiscal third quarter, while Lumia volume grew a slighter 13 percent.
It appears that the company notched record highs, but not scorching growth. This is doubly true when you take into account the fact that the last quarter included the holiday sales season, without which it isn’t hard to estimate that the company could have ended up seeing device volumes and revenue fall.
The Microsoft earnings call kicks off in just a few minutes. I’ll update this post if the company sheds any more light on its device performance.