Satya Nadella, CEO, Microsoft, has put cloud computing at the centre of Microsoft’s strategy and it certainly seems to work, at least, when it comes to attracting investors. That decision might cause even lower sales numbers, unless other manufacturers are going to develop phones running on Microsoft’s mobile operating systems.
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Office commercial products and cloud services revenue rose 5 percent driven by Office 365 revenue growth of almost 70 percent.
“Intelligent Cloud”, as Microsoft dubs its division, also covers Windows Server and enterprise software sales, making it hard to pick out just how much Azure made by itself, making a direct comparison to AWS very hard. Operating profit fell to USD 6.0 billion from USD 7.8 billion, and net profit dropped to USD 5.0 billion from USD 5.9 billion a year ago.
Microsoft’s decision to focus more on cloud services – where its competitors include Amazon, Google, IBM and Cisco – has helped it move away from the declining PC market. Ms. Hood said Thursday that 30% of all search revenue derived from Windows 10 devices, meaning the platform is contributing at least $300 million to Microsoft’s search business. However, Surface revenue increased 29 percent.
The company’s phone revenue plummeted 49 percent when excluding foreign currency fluctuations as a result of the changes, which included cutting the number of smartphones it sells.
There was plenty of good news. Windows revenue closely tracks sales of personal computers, which fell 10.6 per cent globally in the December quarter from a year earlier, according to research firm IDC.
All of its businesses combined, Microsoft collected $25.7 billion in revenue (non-GAAP) during the quarter.
Microsoft also saw a boost with its Surface tablet and the Xbox game console in the holiday quarter.
“The thing that we notice…is that anyone who has moved to the cloud, there is a real opportunity to move to multiple workloads over time”, Nadella said of the growth of the Azure cloud computing and development platform.
Elsewhere, revenue for the Productivity and Business Processes division declined by two percent, although Microsoft claimed that this is actually a rise of five percent in constant currency and was “in line with expectations”.
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Meanwhile, analysts say Microsoft is also rapidly transforming its commercial-computing division by encouraging corporate customers to use its data centers.
