Microsoft’s Surface hardware lineup reached a new peak of more than $1.37 billion in revenue in the December quarter, a 22 percent increase from the same quarter last year, powered by the release of the Surface Pro 4 tablet and the Surface Book, the Redmond company’s first notebook computer.
That compares to more than $7 billion in revenue for Apple’s iPad lineup in the same quarter — which represents progress for Microsoft given its late start in the first-party tablet market.
However, the company’s smartphone business continued to decline. Microsoft sold just 4.5 million Lumia smartphones worldwide in the holiday quarter, down from 10.5 million a year earlier. Apple sold nearly 75 million iPhone, by comparison.
The Lumia decline follows Microsoft’s decision last year to focus on a smaller number of flagship devices in the Lumia lineup acquired by Microsoft from Nokia. The Redmond company took a charge of $8 billion on the Nokia acquisition last year, stepping back from its previous ambitions to go toe-to-toe with Apple, Google and Samsung in the smartphone market.
Given the surging Surface lineup, it would make sense for Microsoft to come out with its own Surface branded smartphone, essentially resetting its strategy. That possibility has been widely rumored, but not confirmed by Microsoft executives.