iPad Takes a Bite out of Microsoft Sales

Growing interest in tablets led to a decline in PC shipments

Headshot of Emma Bazilian

Apple’s iPad has taken a big bite out of Microsoft’s PC sales.

Microsoft reported on Thursday that its sales in the first quarter fell short of analysts’ predictions despite the company's overall rise in fiscal third quarter profits.

In a statement, Microsoft said that revenue for the unit that includes Windows fell to $4.45 billion. Analysts had predicted that number at $4.6 billion. PC shipments dropped by 3.2 percent worldwide in the quarter. Some analysts blamed this decline on the earthquake and tsunami in Japan, a big market for Microsoft’s products, as well as the fact that many consumers are choosing to purchase to tabletsespecially the iPadinstead of Microsoft computers. Most of these tablets run Apple or Android software, while few rely on Windows.

This was also the first time that Apple had surpassed Microsoft in quarterly profits: Apple reported $5.99 billion, while Microsoft was at $5.23 billion.

Microsoft ended regular trading up 33 cents to $26.71, but the stock declined by 74 cents in after-hours trading, winding up at $25.97.

@adweekemma emma.bazilian@adweek.com Emma Bazilian is Adweek's features editor.