Xbox Series X S

Xbox, PCs and gaming drive AMD and Microsoft’s revenues

PC, Windows, and console sales elevated both AMD and Microsoft. Supplies of Microsoft's Xbox console, however, will remain tight
Microsoft Xbox Series X (Left) and Series S (right)

27 January 2021

Microsoft’s Xbox was the thread joining Microsoft and AMD on today, as both companies reported stellar quarterly profits and revenues that benefited from the ‘stay at home, play at home’ pandemic experience. Supplies of the console will remain tight for now, though, the companies said.

AMD continued to benefit from the rabid demand for its embedded console processors as well as its GPUs and CPUs for the PC, as the chip company reported profits that soared about 450%, from $390 million a year ago, to $1.78 billion for the fourth quarter of 2020. Revenue also increased by 53%, to $3.24 billion. More tellingly, AMD predicted that revenue for the current first quarter would be about flat, at $3.2 billion – evidence that demand, and revenue, would continue.

Revenue in AMD’s Enterprise, Embedded and Semi-Custom segment revenue was $1.28 billion, up 176% year-on-year. The vast majority of that came from the game consoles that use AMD’s embedded chips: the Sony PlayStation 5, and Microsoft Xbox Series S and X. AMD’s chief executive, Lisa Su, said that AMD is seeing better-than-normal seasonal demand for consoles, and that will continue into the first quarter.




Su also addressed the shortages that made buying AMD’s GPUs, CPUs, and AMD-based consoles so difficult.

“Certainly when I look at the semiconductor environment in 2020, it was very strong,” Su said.

“It’s fair to say overall demand exceeded our planning,” Su added. “As a result, we did have some supply constraints as we ended the year…in the PC market, especially the low end of the PC market.” However, Su said AMD is working with partners to add capacity during the second half of 2021.

Su said 2020 was a very strong for the PC market, and she predicted growth in the “mid single digits”. Su said AMD has focused and will continue to focus on gaming, premium consumer PCs, and PCs for businesses. 

Microsoft: Surface, Windows drive revenues

For its part, Microsoft reported another quarter of strong earnings. Microsoft reported profits for the fourth quarter of calendar year 2020 of $15.5 billion, up 33% from a year ago, on revenue of $43.1 billion, which itself grew 17% from a year ago.

As AMD’s earnings indicated, Microsoft saw strong growth in its consumer businesses: Xbox’s content and service revenue climbed 40%, as the company launched both the Xbox Series X and Series S consoles during the quarter. But the other unexpectedly strong segment was Microsoft’s Surface product line, which is now a $2 billion business on a quarterly basis: Surface reported $2.045 billion in revenue, which grew slightly from the $1.976 billion reported the year prior. Overall, Microsoft’s More Personal Computing business – including Windows, Xbox and Surface – generated $15.1 billion in revenue, up 14%.

“In our consumer business, the overall PC market was stronger than expected, benefiting our Windows OEM, Office consumer, and Surface businesses,” Microsoft chief financial officer Amy Hood said during a conference call with analysts.

According to chief executive Satya Nadella, the launch of the Xbox Series X and Series S was the most successful in Microsoft’s history, with the most devices ever sold in a launch month. Actually buying one of Microsoft’s new Xbox consoles, however, has been next to impossible, and will apparently remain so: “In gaming, we expect continued strong engagement on the Xbox platform and significant demand for the Xbox Series X and S that will still be constrained by supply,” Hood said.

Microsoft recorded more than $2 billion in revenue of third party launch titles in the quarter.  Xbox Live has more than 100 million monthly active users, while Game Pass now has 18 million subscribers. 

Game Pass cloud gaming is present in Android phones, and will be arriving on PCs and iPhones “over the next few months,” Nadella said.

Microsoft’s Windows revenue also indicated the trends in the PC market, dominated by a surge in inexpensive PCs: Windows OEM revenue that wasn’t Windows 10 Pro grew by 24%; Pro revenue fell by 9%. Microsoft’s Productivity and Business Processes, which includes Office, grew 13% to $13.4 billion. Microsoft’s Intelligent Cloud segment, which includes the Microsoft Azure cloud, grew 14% to $15.1 billion.

IDG News Service

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