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Microsoft Sees Surface, Lumia Gains In Fiscal Q3

Redmond, Wash. – Microsoft’s Surface tablets and Lumia smartphones are gaining traction, but Xbox lost steam in the company’s fiscal 2015 third quarter ending March.

Surface revenues rose 44 percent to $713 million, or 53 percent in constant currency, the company reported. Sales were driven by the Surface Pro 3. For the nine-month period, Surface sales were up 52 percent to $2.72 billion.

In the second fiscal quarter, Surface revenues were up 24 percent during the holiday selling season to $1.1 billion.

In fiscal 2014, Surface sales hit $2.19 billion, up from 2013’s less than $1 billion.

For their part, Lumia smartphone unit sales in the fiscal third quarter rose 18 percent to 8.6 million, but Microsoft feature-phone sales were off an unspecified amount to 24.7 million because of the feature-phone market’s decline, Microsoft said.

Total phone revenues hit $1.4 billion in the quarter and $6.3 billion for the nine-month period. Figures for the year-ago periods, before Microsoft purchased Nokia’s phone business in April 2014, were not reported.

The company posted a negative gross margin of $4 million in its phone business in the quarter but posted a $6.3 billion gross margin for the nine-month period.

Windows Phone licensing revenue was down 16 percent “due primarily to the lager mix of low-royalty devices,” the company said in referring to the Windows OS appearing mostly on more affordable phones.

Fiscal third-quarter Xbox revenues were off 24 percent, or 21 percent in constant dollars, because of a companion with the Xbox One’s year-ago post-launch quarter in the fall of calendar 2013.