Xbox and Windows Report Dip in Hardware and Software Revenue

"The first dip in two years"

Xbox Phil Spencer Legal Game Emulation
Xbox and Windows Report Dip in Hardware and Software Revenue

Microsoft has released its fourth-quarter financial report for 2022 and while there’s some good news for the company in regards to its overall net income, various divisions have seen a dip in revenue. According to the report, Microsoft reported a net income of $16.78 billion. Revenue is up 12% and net incoming increases only 2%. However, while this is good news for the business division at Microsoft, both Windows and Xbox has seen a dip.

According to the report, PC shipments have seen the biggest decline in nine years with a 13% slump. This is due to the ongoing war in Ukraine, the inflation brought on by the tension and the continued supply constraints. Windows OEM revenue dipped by 2% in the last quarter. This is the money manufacturers pay Microsoft in order to pre-install Windows on new devices. Microsoft says this dip has been brought on by “production shutdowns and a deteriorating PC market.”

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Third-party Windows PC components are slowing down but Microsoft has reported an increase in its Surface range. Revenue increased by 10% across Q4 even though Microsoft didn’t release any new Surface hardware this year.

Xbox is also following the slump. Hardware revenue dropped by 11% and Xbox content and services also dipped by 6%. Microsoft says the decline is brought on by “lower engagement hours and monetization” across both first-party and third-party titles. Overall, gaming revenue at Microsoft declined by 7% year over year.

“The decline you’re seeing in Xbox hardware is partly a reflection of the fact we had that launch… about two years ago, so with the supply constraints that we had seen over the last couple of years it has kind of extended out that period for consoles. We’re still seeing strong demand, but coming off those highs that we saw in the last couple of years with the launch.”

Of course, Microsoft didn’t share any exact figures on the current Xbox Game Pass subscriber count. The last update was in January this year when the company announced it hit 25 million following the launch of Forza Horizon 5 and Halo Infinite in late 2021.

Source: Microsoft

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