Barely two years into Satya Nadella’s tenure as Microsoft CEO, the once-passé tech giant continues to gain ground, as evidenced by Thursday’s quarterly earnings report. This part of the company makes Azure plus other businesses like Office 365 and it is up 15 percent from the $8.2 billion revenue it estimated last quarter.
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Total revenue, however, fell 10.1% to $23.8bn, squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft’s Windows operating system.
A division it calls “Intelligent Cloud”, which includes both Azure cloud business and Windows Server software sales, filed revenues of $6.3bn in the quarter, up by five per cent. Revenue was down 10 percent from a year ago, but after adjusting for deferred revenue, the numbers were better than Wall Street analysts expected.
Intelligent Cloud, which includes Enterprise Services and service revenue, made $6.4 billion compared to $5.9 billion in the previous quarter.
Microsoft’s aggressive campaign to promote the latest version of its flagship software has already led to the deployment of Windows 10 on more than 200 million devices since its release last summer.
Even with the recent issues in the stock market, Microsoft’s shares are up more than 28 percent compared to the last season, while shares in rivals like Apple, Oracle and IBM have declined by double digits. Most of this business segment’s success was down to Office 365 subscriber and revenue growth but Dynamics revenue also contributed. Azure premium services also grew almost 3 times year-over-year, which is particularly impressive.
Matt Howard, a venture capitalist at Norwest Ventures, said Microsoft had “nailed the cloud”.
Mobile phone revenue were down 4%, but sales of Surface Pro 4 and Surface Book pushed up revenue growth by 29% year-over-year – about $1.3 billion in sales for the Pro and Book line.
The global cloud storage industry was worth nearly $19bn past year, according to Research and Markets.
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The number of people using the Xbox Live service for digital content and video games climbed 30% to a record 48 million. Conversely Windows Phone revenue dived dramatically, it was cut in half in constant currency, apparently following Microsoft’s cunning plans and “reflecting our strategy change announced in July 2015”.
