Microsoft Surface revenue fell 26% during third quarter, but that's not so bad

Third quarter earnings show Surface revenue fell 26%, but that's not as bad as some people might believe.

If you were paying close attention to Microsoft's third quarterly earnings report yesterday, you may have noticed that Microsoft's Surface business declined 26% compared to the same quarter last year. The same time last year, Surface made $1.1 billion, but this time only made $831 million. So what happened there?

Simple put: nothing happened. Microsoft says the reason Surface is doing somewhat worse this quarter is thanks to third-party hardware makers building really great devices and slightly eating into Surface revenue, which is exactly what Microsoft built Surface for in the first place. Hardware makers have really upped their game as of late, which is a win-win situation for the entire PC market.

Another reason why Surface revenue declined is simple: there was no new hardware in 2016. Microsoft hasn't released a "new" Surface device for its wider-audience since 2015. The new Surface Book Performance Base isn't a "new" Surface Book, it's a new SKU for the old Surface Book that was also introduced introduced in 2015 alongside the Surface Pro 4.

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