You realize it’s a tricky quarter for the PC market when Microsoft Surface income drops by 30 %…and that’s good.

Microsoft reported better-than-expected revenues for the primary calendar quarter of 2023, however Microsoft’s More Personal Computing remained a black mark: It was the one division to expertise a income drop, down 9 % to $13.3 billion.

Of all the assorted companies grouped collectively in that enterprise unit, two numbers caught out: Windows OEM income fell 28 %, and Devices (Surface) income fell by 30 %. That’s a sign that Microsoft’s PC prospects noticed a couple of 28 % drop in gross sales, whereas Surface units fell by 30 %, or barely extra. IDC (owned by PCWorld’s guardian, IDG) beforehand reported that PC gross sales fell by 29 % to 56.9 million throughout the first quarter of 2023.

So it was a little bit shocking to listen to chief monetary officer Amy Hood current these numbers to analysts, then add that they had been really forward of expectations. Hood defined that Microsoft really noticed higher than anticipated PC demand, notably within the business section. Unfortunately for Microsoft, income was “negatively impacted by elevated channel inventory levels.”

That’s unhealthy, if you happen to’re a Microsoft shareholder. But that’s nice information if you happen to’re a client, since “elevated channel inventory” merely means “there’s a lot of unsold PCs sitting on store shelves.” To do away with these unsold PCs, the normal means has been via gross sales, reductions, promotions, bundles—all methods to entice you to purchase. There’s a purpose why we observe the best deals that you can find on laptops, virtually day by day.

Hood additionally instructed analysts that situations within the PC market ought to persist: Revenue ought to tick up barely to between $13.35 to $13.75 billion, however PC demand ought to stay unchanged and channel stock ought to stay elevated. The backside line: Expect laptop computer gross sales to proceed.

“Though channel inventory has depleted in the last few months, it’s still well above the healthy four to six week range,” mentioned Jitesh Ubrani, analysis supervisor for IDC’s Mobility and Consumer Device Trackers, earlier this month. “Even with heavy discounting, channels and PC makers can expect elevated inventory to persist into the middle of the year and potentially into the third quarter.”

Those gross sales (precise gross sales!) might prolong to Xbox as nicely. Xbox {hardware} income fell by a whopping 30 %—in Hood’s phrases, due to “increased console supply,” and offset by higher than anticipated monetization. Translated, that implies that Xbox {hardware} is lastly outselling client demand, implying extra gross sales are on their means. If there’s any draw back, it’s that sport makers are discovering methods to lure players into shopping for extra add-ons—which can be DLC, or not.

It’s typically simple to fall into the language that Wall Street employs: earnings are down, so it’s time to interrupt out the waterworks. In this case, each customers and Microsoft have one thing to cheer about: Microsoft’s cloud enterprise continued to buoy revenues and income, in order that Microsoft reported internet earnings ($18.3 billion, up 9 %) and income ($52.9 billion, up 7 %) that exceeded expectations.

But for you, the long run appears assured: The PC gross sales will proceed till gross sales enhance.