Microsoft has released figures for its third quarter, ending March 31st 2015. Here is my simple summary of the figures showing the segment breakdown:
Quarter ending March 31st 2015 vs quarter ending March 31st 2014, $millions
|Devices and Consumer Licensing||3476||-1121||3210||-807|
|Computing and Gaming Hardware||1800||-72||414||+156|
|Devices and Consumer Other||2280||+456||566||+175|
The figures form a familiar pattern: Windows and shrink-wrap (non-subscription) Office is down, reflecting weak PC sales and the advent of free Windows at the low end, but subscription sales are up and cloud is booming. See the foot of this post for an explanation of Microsoft’s confusing segment breakdown.
Microsoft says that Surface Pro 3 is doing well (revenue of $713 million) and this is reflected in the Devices figures. Commercial cloud (Office 365, Azure and Dynamics) is up 106% year on year.
Cloud aside, it is impressive that server products reported a 12% year on year increase in revenue. This is the kind of business that you would expect to be hit by cloud migration, though I am not sure how Microsoft accounts for things like SQL Server licenses deployed on Azure.
Xbox One is disappointing, bearing in mind the success of the Xbox 360. Microsoft managed to lose out to Sony’s PlayStation 4 with its botched launch and market share will be hard to claw back.
Microsoft reports 8.6 million Lumias sold, the majority being low-end devices. Not too bad for a platform many dismiss, but still treading water and miles behind iOS and Android.
The company remains a huge money-making machine though, and Office 365 is doing well. A few years ago it looked as if cloud and mobile could destroy Microsoft, but so far that is not the case at all, though its business is changing.
Microsoft’s segments summarised
Devices and Consumer Licensing: non-volume and non-subscription licensing of Windows, Office, Windows Phone, and “ related patent licensing; and certain other patent licensing revenue” – all those Android royalties?
Computing and Gaming Hardware: the Xbox One and 360, Xbox Live subscriptions, Surface, and Microsoft PC accessories.
Devices and Consumer Other: Resale, including Windows Store, Xbox Live transactions (other than subscriptions), Windows Phone Marketplace; search advertising; display advertising; Office 365 Home Premium subscriptions; Microsoft Studios (games), retail stores.
Commercial Licensing: server products, including Windows Server, Microsoft SQL Server, Visual Studio, System Center, and Windows Embedded; volume licensing of Windows, Office, Exchange, SharePoint, and Lync; Microsoft Dynamics business solutions, excluding Dynamics CRM Online; Skype.
Commercial Other: Enterprise Services, including support and consulting; Office 365 (excluding Office 365 Home Premium), other Microsoft Office online offerings, and Dynamics CRM Online; Windows Azure.