When the first Surface Laptop Go 2 was released, it was received positively by students and small businesses. It promised to be an alternative to the Chromebook. Unfortunately, its release was at a time when working from home was the norm due to the pandemic.
Now we are post-pandemic. Still, the Surface laptop Go 2 is still prevalent. That is why Microsoft ($399.04|-2.45%) has decided to upgrade the laptop. The older version had a fantastic processor, was ultra-portable, and the pricing was affordable. But some features users desired Microsoft to improve upon were the low-resolution screen and the backlit keyboard. Fast forward to June 1, 2022, as Microsoft announces an updated Surface Laptop Go 2 that seeks to address the desired features of the 2020 version.
You must be aware that most tech companies are facing supply chain constraints. As a result, it is challenging to get chips for producing tech products. Microsoft is also not left out. Despite this, the revenue from the surface laptop increased. The income from the Surface brand broke the $2 billion mark after the original Surface Laptop Go was released in 2020. In 2021, according to the earnings call for Q4 2021, there was a growth of 8% in sales of Surface laptops, which had the Surface Go as the driver. Unfortunately, Microsoft has stopped releasing data on the performance of its laptops after Q4 2021, so we don’t know yet how the Surface brand performed in Q1 2022.
According to the forecasts released by Microsoft for 2022, it believes that the Surface Laptop Go’s growth will be in the “mid-teens.” It expects the demand to grow, particularly during the summer. Last year’s exceptional earnings growth has links to the 2021 holiday season.
The admirable performance of the Surface Laptop Go so far must have been a factor why it is getting an upgrade. Also, the original Surface Laptop Go will reach its end of servicing date by May 2024. So, to maintain the brand’s cycle, it needed an upgrade.
Right now, Microsoft Surface Laptops and Chromebooks are head to head in market share in the personal computing devices category for budget laptops. While Microsoft Surface Laptop has about 10.43% of the market share, Chromebooks occupy approximately 14.01%, with the rest of the market shared between budget laptops from Lenovo, Ideapad, HP, and Dell. However, with the introduction of the upgraded Surface Laptop Go 2, we believe that this laptop will surpass Chromebooks as the budget laptop of choice among personal computing device users. One reason is that many students and small businesses take battery power as very important. This new laptop optimizes on that and gives about a full day of battery use, while Chromebook can deliver only 9 hours of full-time battery use.
Recently, Chromebooks have gained market share from Microsoft, especially with its revamped Chrome OS. This was particularly telling in 2021 when the supply chain shortages in chips made Microsoft laptop sales decline. We believe that laptops like the Surface Laptop Go 2 will help Microsoft steal some of the action from Chromebooks. Also, Windows 11, which powers the Surface Laptop Go 2, is a worthy contender to the Chrome OS. Windows OS has more than 74% of the operating systems market share.
Microsoft is also slowly making a shift from desktop computing to cloud computing. This has given the Microsoft stock much leverage. The Surface Laptop Go 2 is part of that pivotal move. Its earlier launch in 2020 has become a considerable contribution to Microsoft’s revenue as it contributed $2 billion to the overall earnings.
Microsoft had better than expected earnings in its Q1 2022 earnings call. After the earnings call, its stock rallied by 4.8% the next day. With the expected benefits of this upgraded budget laptop, we see Microsoft ($399.04|-2.45%) still maintaining its bullish position this year.
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