Microsoft Corp is getting serious about its rebirth as it borrows some pages from the Apple Inc. playbook to set up its flagship New York store, which opens today. Confirming news from last month, Microsoft would officially open a new flagship store in New York today to replace the Fendi store at 677 Fifth Avenue. Microsoft’s store mimics the look and feel of Apple’s retail stores – in fact; it is just a stone throw from Apple’s famous cube store.
Nonetheless, Microsoft doesn’t seem to have what it takes to take on Apple on the consumer electronics space as the first set of numbers of hardware sales starts to surface. Microsoft has been trying to rebrand itself as a dynamic tech firm that understands the needs of modern users. Microsoft has delivered new lines of hardware in Surface Pro and Surface Book, and Windows 10 is getting rave reviews, but it seems that it has yet to find the secret key for unlocking sales.
Microsoft posts less than stellar sales number
Last month, the firm said it would now report its financials in three core segments along the lines of its cloud, productivity, and, mobile businesses. Now, Microsoft lumps all the revenue from smartphones, Xbox, Surface line, Windows under its MPC segment. Last Thursday, Microsoft reported its Sept. quarter and the market noticed that the firm reported declines in revenue from its Windows, Surface line, and smartphone lines.
However, despite the lumping together of the different product lines, Microsoft reported total revenue of $9.4B in its MPC line. The revenue marks a 17% decline from the comp quarter in 2014, making room for currency headwinds still means there’s a 13% decline in revenue. The main cause of concern from the MPC revenue is that MPC accounts for 46% of the firm’s total revenue of $20.4B. Hence, the fact that MPC is not growing doesn’t bode well for the firm.
More painful is the fact that MPC is the least profitable unit at Microsoft. The operating income from MPC stood at 17% of its revenue despite the fact that was the biggest segment at the firm. It appears that Microsoft would eventually come to terms with the fact that it can compete for space in the smartphone market. Its Lumia line of smartphone has a massive $1.5B decline in revenue. Revenue from the Surface line was also down 26%.
Microsoft still has a long way to go
Microsoft has gone a long way in trying to rebrand itself and change the perspective of users about its products and services. It is working with other tech players, it has made Office 365 cross-platform for Apple products, and the firm is launching cool products. However, everything has an Apple-wannabe feel to it and the tech space doesn’t really applaud copycats. Microsoft might need to do more than open a couple of stores here and there if it really wants to sell the great products it makes.