Microsoft Earnings Call Insights: Surface Profitability and Reducing Price Points

Microsoft Corporation (NASDAQ:MSFT) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Surface Profitability

Phil Winslow – Credit Suisse: Just wanted to spend a moment on Surface, obviously you talked about ramping up production and distribution of that. What are some of your goals as you look at Surface RT and Pro for this year and within that context, how should be think about the profitability of the Surfaces?

Peter Klein – CFO: Thanks Phil as we said we think of Surface as one part of the overall Windows 8 story. Certainly this quarter, it was a contributing factor for the revenue growth in the Windows business. What it does is it sort of highlights some interesting innovation that can happen to sort of demonstrate the power of Windows 8 when tightly integrated with hardware and software and some new categories of devices. We obviously had some limited distribution this quarter in our stores, and as you know, we’re excited about expanding that.

So, you know, our goal is to continue to build that business to highlight the incredible power of Windows 8 in an interesting set of devices. We’re going to expand geographically. We’re going to expand the product line up. We’re going to expand retail distribution and capacity. So we look forward to sort of continuing the growth of that business.