The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain. The company believes the changes to demand and inventory patterns are caused by lower than expected Windows XP* refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe.
This means that Microsoft’s Windows division revenue might also be lower than expected. Even during last quarter, Windows revenue saw a significant drop.
Windows OEM revenue declined $455 million or 13%, due to a 13% decrease in both OEM Pro revenue and OEM non-Pro revenue. Windows OEM Pro revenue decreased, primarily due to benefits realized from the expiration of support for Windows XP in the prior year and an increased mix of lower-priced licenses for devices sold to academic customers. Windows OEM non-Pro revenue declined, mainly due to an increased mix of opening price point devices sold. Office Consumer revenue declined $208 million or 25%, reflecting the shift of customers to Office 365 Consumer, and declines in the Japan PC market, where Office has high attach to PCs.
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