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Microsoft Surface Sales Rebound With Surface Pro 4, Surface Book

Microsoft’s Surface sales rebounded in the company’s fiscal 2016 second quarter ending December, thanks in part to the launch of the Surface Pro 4 tablet and the first Surface Book laptop, Microsoft reported.

But Xbox console sales fell because of declines in older Xbox 360 consoles, and phone sales continued to plummet, the company said.

The Surface Pro 4 and Book launched in October 2015, and the company expects Book sales to continue rising as it rolls out the device “soon” to China, Japan, the U.K., France, Germany and other markets in Europe and Asia.

Microsoft posted its best-ever quarter of Surface sales, with year-over-year sales rising 22.5 percent to $1.35 billion (up 29 percent on a constant-currency basis), thanks to the new-product launch, continued channel expansion and growing commercial sales, said CFO Amy Hood.

Surface sales in the second quarter marked a turnaround from the fiscal first quarter’s year-over-year drop of 35.1 percent to $672 million. The drop was attributed to market anticipation of the new Surface Pro tablet for Christmastime sales.

In the company’s fiscal 2015 fourth quarter, Surface sales hit $888 million following sales of $713 million in the third quarter, $1.1 billion in the second quarter, and $908 million in the first quarter.

Though sales of Xbox consoles fell by an undisclosed amount in the second quarter, gaming revenue increased 5 percent, or 9 percent in constant currency, driven by record Xbox Live transactions and first-party game releases such as Halo 5 and Minecraft, Hood said. XBox Live active users grew 30 percent to 48 million.

Total device sales, including Surface, phones and game consoles, were down 26 percent, or 22 percent in constant currency, primarily because of a 49 percent drop on phone revenues resulting from a decision announced last July to dramatically scale back phone selection.