Microsoft Windows sales experience a quite worrying trend in OEM (Original Equipment Manufacturer) sales. As reported during the earning calls for the recent quarter (Q4), Microsoft lost a whopping $337 million, which is a 5% decrease, in Windows OEM sales.
If you’re not familiar, OEM refers to a license for Windows that is sold to computer, laptop, or desktop manufacturers (OEMs) for pre-installation on new computers. OEM licenses are typically less expensive than retail licenses, and they are not transferable to other computers.
The reason? Well, Microsoft says that the drop was due to “continued PC market weakness.” If you may remember, PC sales fell hard in 2022 for so many reasons, as revealed by analysis firm Canalys at that time.
On the other hand, the Redmond-based tech giant had foreseen this situation and attributed the decrease in revenue to the persisting weakness in the PC market, coupled with a strong performance in the previous year.
As predicted, this quarter wasn’t the first and the only Windows OEM drop that Microsoft has seen this year. The trend was similar in the past three quarters: $365 million and a 6% decrease in Q1, $1.8 billion and 27% in Q2, and $741 million or 12% in Q3.
Though, not everything looks so bad. Windows Commercial products and cloud services hiked a little by 2% thanks to demand for Microsoft 365, which is a subscription service that gives users access to a variety of Microsoft productivity apps, including Office 365, Exchange Online, and SharePoint Online.
If you may remember, Microsoft has been gearing up for the release of its AI assistance tool, Copilot, and this could be one of the reasons for this small pump.
What are your thoughts on the decline of Microsoft Windows sales in OEM? Will we still see the same trend in the next quarter? Let us know in the comments!