Microsoft released its financial results yesterday, for the quarter ending September 30th 2014. It was a good quarter in most respects, though consumer Windows and Windows Phone licensing are weak.<\/p>\n
Good news outweighs bad though, particularly the company\u2019s success in transitioning Office customers from perpetual licences to subscription, even in the consumer market. It also seems to be performing some magic in the server segment, growing both cloud and on-premises revenue, a trick CEO Satya Nadella attributes to the \u201cunique hybrid and private cloud capabilities that are built into our Servers\u201d.<\/p>\n
Here is the segment breakdown, if you can make sense of Microsoft\u2019s segments:<\/p>\n
Quarter ending June 30th 2014 vs quarter ending June 30th 2013, $millions<\/em><\/p>\n A few notable stats.<\/p>\n Devices and Consumer licensing is weak, in line with the PC market, a decline in Office consumer review (these figures exclude Office 365), and a 46% decline in Windows Phone revenue \u2013 the non-Nokia licensees.<\/p>\n Surface Pro 3 is a hit and brought in revenue of $908 million, \u201ctwice the [sales] rate of Surface Pro 2\u201d, according to CFO Amy Hood. The gross margin on Surface is \u201cpositive this quarter\u201d, said Microsoft, though it is undoubtedly negative over the lifetime of Surface.<\/p>\n 2.4 million Xbox consoles were sold (including 360 as well as Xbox One), and overall revenue is up 58%; a decent performance considering that Sony\u2019s PlayStation 4 is generally outselling Xbox One.<\/p>\n Windows Phone: Nadella reported \u201cmodest growth driven by sales in Europe, where we gained share with lower priced devices\u201d. 9.3 million Lumias were sold overall. Non-Lumia devices are expected to decline; Microsoft is not interested in this business, though it said sales were \u201cin line with the market for feature phones.\u201d No mention of the mis-conceived Nokia X.<\/p>\n Devices and Consumer Other is where Office 365 consumer revenue lives. There are now over 7 million consumer subscribers and it grew 25% over the previous quarter <\/em>(most comparisons are year on year). Microsoft\u2019s ability to shift customers to a cloud-based subscription model is key, especially as more of them run Office on an iPad or Android tablet.<\/p>\n Windows Server, System Center and SQL Server grew revenue again; revenue from server products overall is up 13%<\/p>\n Cloud \u2013 Office 365, Azure and Dynamics \u2013 delivered revenue up by 128%. Nadella added in the webcast that a \u201cmajor Azure service or feature\u201d is added every three days.<\/p>\n From a financial perspective, Microsoft has an advantage over cloud rivals Amazon and Google, in that its customers are more likely to purchase licenses for products like SQL Server along with the commodity-priced cloud infrastructure. <\/p>\n A key comment from Nadella: \u201cOur premium services on Azure create new monetization opportunities in media, data, machine learning, advanced analytics and enterprise mobility.\u201d<\/p>\n Aside: Microsoft created its online slide deck using a beta PowerPoint add-in called Office Mix<\/a>, which I had not seen before. It creates a video from a powerpoint deck, with the ability to insert audio, video and interactive content like quizzes, as well as screen capture. Then you can upload it to the cloud. It is mainly aimed at education, but might also be useful for, say, journalists doing product review.<\/p>\n","protected":false},"excerpt":{"rendered":" Microsoft released its financial results yesterday, for the quarter ending September 30th 2014. It was a good quarter in most respects, though consumer Windows and Windows Phone licensing are weak. Good news outweighs bad though, particularly the company\u2019s success in transitioning Office customers from perpetual licences to subscription, even in the consumer market. It also … Continue reading Microsoft financials show robust performance, Office in transition to subscription, both cloud and server growth<\/span> \n\n
\n Segment<\/td>\n Revenue<\/td>\n Change<\/td>\n Gross margin<\/td>\n Change<\/td>\n<\/tr>\n \n Devices and Consumer Licensing<\/td>\n 4093<\/td>\n -391<\/font><\/span><\/span><\/td>\n 3818<\/td>\n -102<\/font><\/span><\/span><\/td>\n<\/tr>\n \n Computing and Gaming Hardware<\/td>\n 2453<\/td>\n +1044<\/td>\n 479<\/td>\n +274<\/font><\/td>\n<\/tr>\n \n Phone Hardware<\/td>\n 2609<\/td>\n N\/A<\/td>\n 478<\/td>\n N\/A<\/td>\n<\/tr>\n \n Devices and Consumer Other<\/td>\n 1809<\/td>\n +255<\/font><\/td>\n 312<\/font><\/span><\/td>\n -12<\/font><\/span><\/td>\n<\/tr>\n \n Commercial Licensing<\/td>\n 9873<\/td>\n +262<\/font><\/span><\/td>\n 9100<\/td>\n +295<\/font><\/span><\/td>\n<\/tr>\n \n Commercial Other<\/td>\n 2407<\/td>\n +805<\/font><\/span><\/span><\/td>\n 805<\/font><\/span><\/span><\/td>\n +531<\/font><\/span><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n