The US software giant, which bought Nokia for £4.5 billion in 2014, saw sales of handsets plummet from 10.5 million in the final quarter of 2014, it revealed in its FY16 Q2 results. While it’s still far from the company’s largest business, revenue from Surface devices grew 29 percent year on year to $1.35 billion on the back of good Surface Pro 4 and Surface Book sales.
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Citing solid holiday wins across the Xbox platform, Bing and the Windows Store – all of which were tied to Windows 10 features and integration – Nadella added that Microsoft would also be banking on Surface’s favorable consumer reception for future growth.
However, revenue in productivity and business processes declined 2 percent to $6.7 billion and revenue in personal computing declined 5 percent to $12.7 billion. Within that division, Microsoft said revenue from licensing Windows to PC makers was also down 5 percent, although the company pointed out that was better than the 8.3 percent decline in overall PC sales that market researchers have estimated for the October-December quarter. That decision might cause even lower sales numbers, unless other manufacturers are going to develop phones running on Microsoft’s mobile operating systems.
Microsoft revenue for Azure, its cloud-computing platform, surged 140% excluding currency impacts, while server products and cloud services revenues were up 10%.
In November, Microsoft released the first major update for Windows 10 with solutions created to address business scenarios: security, manageability and ease of deployment. Microsoft has previously predicted that its cloud revenue will rise to $20 billion in 2018.
To be fair to Microsoft it wasn’t helped by the strength of the USA dollar versus other currencies, a factor that has hit other companies like Apple and IBM, among others. The results sent its shares up 3% in after-hours trading. The company was driven by strong performance from its cloud computing and Surface business units.
Bing search revenue grew 21 percent (but was down sequentially), boosted by Windows 10 adoption according to the company.
Revenue was $25.69 billion, topping estimates of $25.26 billion.
This represents a stunning decline of 57% compared to the same quarter a year ago.
The “cloud space is up 70% with a 9.4 billion run-rate”, Nadella said on the call. That was down 1.6% from the $26.14 billion Microsoft reported past year.
The number of people using the Xbox Live service for digital content and video games climbed 30% to a record 48 million.
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Microsoft exceeded Wall Street’s forecasts for its fiscal 2106 second quarter Thursday, with Azure, Office 365 and Surface products all continuing to see healthy sales growth.
