Microsoft Launches New Surface Products to Boost Hardware Sales

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Microsoft Launches New Surface Products to Boost Hardware Sales

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What Happened?

Microsoft (NASDAQ:MSFT ) launched new Surface GO2, Surface BOOK 3 and Surface Headphones 2 on Thursday. The move is to bolster its hardware and surface revenues at a time when there’s a heightened demand for personal devices due to work-from-home norms almost everywhere in the world.

Microsoft

So What?

COVID-19 has changed everything and disrupted almost every business and forcing the organisations to navigate new landscapes. Microsoft is taking initiatives to give an incredible experience to their customers by using technology to maintain business continuity.

The biggest missed opportunity during the first phase of pandemic was in “Surface”, where demand was huge, the channel inventory was depleted and supply chain constraints reduced finished goods output. It is believed that the company could have easily sold 15-20 % more if available.

The launch of new products will have the minimal impact” on the revenue and will boost the supply in this pandemic. As Microsoft posted the Q4 2019 results, revenue reported was $33.7 billion and net income of $ 13.2 billion. Both are big increase year over year. Setting a new record for fiscal year for Microsoft. Surface revenue was up in the same quarter last year and it is increased once again by 14%. Microsoft attributes this to strong growth in their commercial segments. This growth shows that surface hardware are selling well.

What makes it stand out in market?

As Microsoft has launched Surface GO2 is a sequel to the Surface GO launched in 2018. During this pandemic situation, this product is mainly focused and designed for targeting education sector. Microsoft Surface BOOK 3 is a high end laptop targeted at developers, graphic designers and for professional users.

Microsoft sees the Surface Book 3 as competitor to Apple’s flagship MacBook Pro. However, unlike the MacBook Pro the Surface BOOK 3 also transforms into a tablet. Microsoft also announced the second generation Surface headphones. Interestingly, Apple is also believed to launch its over-ear headphones to the market this year. Microsoft also launched Surface Earbuds, DOCK 2 is going to give a tough competition to the Apple Air Pods.

Per our database, Microsoft’s revenues from its surface products has been steadily increasing year over year.

Although Surface revenues have steadily climbed over the past three years, we saw a steep decline in the last quarter to nearly reach $1.4 billion due to the supply chain disruptions caused by the coronavirus outbreak.

Now What?

As Microsoft has launched new products in Surface segment, it can fulfill the unfulfilled demands of the customers during this lock down. These products have unique feature which would lead to more demand and revenue generation for the organisation and also provides an advanced version of technology. So, these new products should ideally serve as a booster for Microsoft’s revenues and its share price.

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