Microsoft Finds Solid Footing on Surface, Posts Record Revenue

Paul Lilly

Holiday quarter was kind to Microsoft

If at first you don't succeed, try, try again. That's the motto Microsoft followed with its Surface strategy, which initially failed to win over customers and led to a $900 million charge on unsold inventory. Oh, but what a difference a couple of quarters can make. Microsoft's Surface revenue more than doubled sequentially to $893 million en route to the Redmond giant posting record revenue of $24.52 billion for the quarter ended December 31, 2013.

Microsoft also benefited from its Xbox One console launch. The company sold 3.9 million Xbox One consoles during the quarter, or 900 million more than it previously announced, along with 3.5 million Xbox 360 consoles.

"Our Commercial segment continues to outpace the overall market, and our Devices and Consumer segment had a great holiday quarter," said Steve Ballmer , chief executive officer at Microsoft. "The investments we are making in devices and services that deliver high-value experiences to our customers, and the work we are doing with our partners, are driving strong results and positioning us well for long-term growth."

Microsoft's record revenue came despite what it called "softness in the consumer PC market," which resulted in declining Windows sales. Windows OEM revenue dipped 3 percent. However, Microsoft grew its Bing search 18.2 percent and saw a 34 percent increase in search advertising revenue.

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