Microsoft expects low revenue from phone business in Q2

Lumia smartphone maker Microsoft today said its phone revenue in the second quarter of fiscal 2015 will decrease to $2.2 billion from $2.6 billion in Q1 fiscal 2015.

Microsoft, which will replace Nokia Lumia with Microsoft Lumia and continue to sell Nokia branded low-end phones, will bet on Microsoft Lumia the 500 and 600 series devices.

The decrease in phone revenue is because of the anticipation of decline in ASPs of non-Lumia devices in Q2.

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“In phone hardware, we expect revenue to be $2.0 billion to $2.2 billion. This range anticipates both year-over-year and sequential growth in Lumia units driven by the 500 and 600 series devices. As a result of the ongoing market dynamics and our portfolio rationalization, we expect those volumes and ASPs of non-Lumia devices to decline in Q2,” said Microsoft.

 

Surface business

Microsoft generated $908 million revenue from tablet business in Q1 in fiscal 2015, thanks to demand for Surface Pro 3. For comparison, Apple sold iPad tablets worth $5 billion in its latest quarter.

The company said Surface had strong results this quarter driven by positive customer response to Surface Pro 3. The Surface Pro 3 is now available in 28 markets. Surface Pro 3 unit sales are pacing at twice the rate of Pro 2. Students, professionals and enterprises are replacing their laptops and tablets with Surface Pro 3 for their productivity needs.

Phone business

“We are executing on all of the restructuring changes we talked about in the last quarter while driving Lumia share growth. We saw modest growth over the prior year driven by sales in Europe where we gained share with lower price devices,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Microsoft started vitalizing manufacturing capacity, created one development team to accelerate the pace of innovation and focus of sales and marketing efforts on Lumia, which grew in several key markets.

Sales of non-Lumia phones were down driven by declines in the underlying feature phone market, as well as portfolio rationalization.

Microsoft launched Xbox One in 28 markets, increased console unit sales from a year ago, and grew users of Xbox LIVE apps by more than 20 percent.

Anand B
editor@gizmolead.com

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