Microsoft has released its financial statements for the quarter ending December 31 2018. Sometimes it seems that all the talk is of Google, Facebook, Apple and Amazon, but Microsoft continues to deliver strong results.
That said, it is an increasingly corporate story. The company still has a presence in gaming, both on Xbox and PC, and reports Xbox software and services growth of 31%. Consumers still buy Windows and Office; there are now 33.3 million Office 365 consumer customers.
There is no longer a PC in every home though. There might be an old one; but PCs now tend to be bought for specific purposes such as gaming or home working. There are plenty of other options for casual home computing. Windows OEM revenue is down 5%.
It is a different story in the business world. Office 365 is still motoring, with revenue growth of 34% year on year. A spin-off benefit is that Dynamics 365, once a poor cousin to Salesforce for cloud CRM, now reports revenue growth of 51% year on year, despite the product’s eccentricities and high price. The key is integration and upsell: get users hooked on Office 365 for email and documents, and compelling add-ons become an easy sell.
Rather to my surprise, Microsoft’s LinkedIn acquisition seems to be working. Revenue is up 29%, session numbers are up 30%. My anecdotal experience bears this out. People are actually acquiring and doing business via LinkedIn, even though it suffers from masses of bad data and the usual perils of social media (fake accounts, scammers, harassers and so on). For now, users seem to be able to manage these problems and interact with the right people.
Azure revenue is up 76%.
All well in Redmond then? The risk is that the company’s narrowing focus will leave it vulnerable to competitors who take advantage of their control of the end points (clients): smartphones, tablets, smart devices running Linux. Even now the web browser, with the Edge team now integrating Google’s browser engine, Chromium, rather than building their own.
For now though, Microsoft powers on.
Here is the breakdown by segment, such as it is:
Quarter ending December 31st 2018 vs quarter ending December 31st 2017, $millions
|Productivity and Business Processes||10100||+1147||4015||+678|
|More Personal Computing||12993||+823||2964||+454|
The segments break down as:
Productivity and Business Processes: Office, Office 365, Dynamics 365 and on-premises Dynamics, LinkedIn
Intelligent Cloud: Server products, Azure cloud services
More Personal Computing: Consumer including Windows, Xbox; Bing search; Surface hardware