Microsoft Reports 22% Decline in Windows OEM and Devices Revenue

Microsoft reported strong Q3 2026 results with $92.3 billion in revenue. However, the company’s earnings report also revealed that, despite overall revenue growing 19% year-over-year, the Windows OEM licensing business is struggling, with a 22% decline on a yearly basis. This quarter, revenue from Windows 11 OEM licensing and Surface PCs amounted to $3.6 billion, a significant drop from the $4.6 billion this segment generated last year. Several factors contribute to this decline, making it the only business unit, alongside Xbox, to experience a downturn. The first factor is the drop in consumer PC demand. As Microsoft sells Windows 11 licenses to PC OEMs, weakening demand in this space, caused by rising prices, has directly resulted in fewer licenses sold to major PC OEMs like ASUS, HP, Dell, and Lenovo.

Additionally, Microsoft Surface PCs are included in this mix. The generally weak PC demand means consumers are less willing to spend on other brand PCs, and they are behaving…