Microsoft announced its financial results for the third quarter of 2026, reporting total revenue of $92.3 billion. This figure represents a 19 percent increase compared to the same period last year. Despite the overall growth, the company faced challenges in its hardware and licensing segments.
The Windows OEM and devices division reported a 22 percent year-over-year decline in revenue. Earnings for this segment dropped to $3.6 billion from $4.6 billion in the previous year. This unit, along with the Xbox business, was the only part of the company to experience a downturn during the quarter.
The decline is attributed to reduced consumer demand for personal computers. Lower sales volumes for major OEMs, including ASUS, HP, Dell, and Lenovo, directly impacted Windows 11 licensing revenue. Additionally, Microsoft Surface PC shipments have decreased as consumers show less interest in mid-tier and high-end devices.
Rising costs in the memory and storage supply chain forced Microsoft to increase prices for its hardware. These price hikes have led consumers to delay their purchasing decisions. The combination of weaker demand and higher procurement costs remains a significant factor in the current performance of the segment.
