Microsoft shrugs off Windows 8 issues with record revenue

Yesterday Microsoft released its financial figures for the first three months of 2013.

Quarter ending March 31st 2013 vs quarter ending March 31st 2012, $millions

Segment Revenue Change Profit Change
Client (Windows + Live) 5703 +1070 3459 +480
Server and Tools 5039 +508 1979 +293
Online 832 +125 -262 +218
Business (Office) 6319 +477 4104 +307
Entertainment and devices 2531 +913 342 +570

Note that the figures for Windows and Office are boosted by deferred revenue from upgrade offers. The PC sales decline will be reflected in Windows client sales next time round.

CFO Peter Klein spoke of hoped-for improvements in Windows 8 device fortunes based on refinements coming in Windows “Blue” as well as more power-efficient CPUs coming from Intel. “We are confident we are moving in the right direction,” he said.

He also discussed the new subscription-based model for Office. Office 365 has added five times more subscribers this quarter than in the same period last year, he said, and revenue exceeds $1 billion.

Suh said that System Center revenue is up 22% and that Hyper-V has gained 4 points of market share in the year. Lync and SharePoint are also growing.

In answer to a question about Surface, Microsoft’s own-brand tablet, Klein spoke about a coming “broader array of Windows 8 devices including lower price points.” 

The deferred revenues disguise what would otherwise be a decline in Windows sales, but in other respects these figures are remarkable, particularly in a difficult economy.

Isn’t Windows 8 a failure, and won’t declining PC sales take Microsoft down too? It is possible, but so far the company has proved resilient. Perhaps the most significant positive here is that both Office 365 and Azure are working for the company, which means that cloud computing is not killing Microsoft’s business in the way that some speculated.

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