Microsoft reported strong Q3 2026 results with $92.3 billion in revenue, up 19% year-over-year. However, the Windows OEM licensing business is struggling, declining 22% yearly. Revenue from Windows 11 OEM licensing and Surface PCs reached $3.6 billion this quarter, down from $4.6 billion last year.
Several factors contribute to this downturn. Consumer PC demand has dropped, with weakening demand directly resulting in fewer licenses sold to major OEMs like ASUS, HP, Dell, and Lenovo. Microsoft Surface PCs are also included in this mix, priced for mid-tier to high-end buyers.
Recent supply chain cost increases for memory and storage led to general price increases, causing consumers to delay purchases. The Xbox unit also showed signs of decline, generating $5.4 billion compared to $5.51 billion a year ago. Although the drop is not significant, it indicates that restructuring within the business unit may be necessary.
Prior to this report, numerous changes in leadership and initiatives have occurred. Helen Chiang, Xbox's first-ever chief operating officer, left Microsoft just three months after taking the role. Recently appointed Xbox CEO Asha Sharma has opened the XP division to focus on entertainment and more.
Outcomes of these efforts remain to be seen.
Source: TechPowerUp News · Summarized by HeadlinesBriefing