Microsoft says the supply constraint affected its sales

Jul 28, 2021 13:06 GMT  ·  By

Microsoft has confirmed that sales of its devices, including Surface PCs and Xbox consoles, have been substantially impacted by the global chip crisis, explaining that the company doesn’t expect things to return to normal during the next quarter.

Amy Hood, executive vice president and chief financial officer of Microsoft, explained during a call with analysts following the FY21 Q4 earnings release that the chip shortage has impacted revenue in three important categories concerning the consumer business, including Windows OEM, Surface and Xbox.

“In our consumer business, Windows OEM and Surface were impacted by the ongoing constraints in the supply chain,” Hood explained.

“Revenue was $14.1 billion, increasing 9 percent and 6 percent in constant currency, with better-than-expected performance in Windows Commercial, Gaming, and Search offsetting OEM and Surface weakness from supply chain constraints. OEM revenue declined 3 percent, and Surface revenue declined 20 percent and 23 percent in constant currency, as both were impacted by the significant supply chain constraints noted earlier in a good demand environment,” she continued when discussing More Personal Computer market performance.

Xbox likely to continue growth, still struggling with chip shortage

Hood says Microsoft expects Surface revenue to decline especially in the low teens category, mostly as a result of the supply chain challenges that the company is still struggling to deal with.

Xbox, on the other hand, had a pretty good year. But it could’ve been even better, Microsoft explains, as the global chip shortage impacted the console as well.

Xbox Series X and S are the fastest selling consoles ever, Microsoft CEO Satya Nadella said. And while Microsoft expects sales of the new-gen consoles to continue their growth, this will be impacted by the lack of chips, Hood explains, with the increase likely to stay in the low single digits zone.