Microsoft hardware plummets despite cloud gains
Monday 1 May 2017 | 0 Comments
Microsoft hardware plummets despite cloud gains
Surface and PCs crash, but Microsoft looks to its cloud.
Microsoft marginally missed analyst revenue estimates during the latest
quarter, as the company experience decline in its hardware businesses,
despite surging cloud growth.
Overall adjusted revenue rose 6% to $23.56 billion, slightly below analyst
estimates of $US23.62 billion. The mixed results sent shares in the
technology giant falling by 0.6% to $67.85 in after hours trading.
Microsoft's CEO, Satya Nadella, has steadily shifted Microsoft's focus away
from the declining PC market, towards the burgeoning cloud computing
industry. That move seems to be paying off for Microsoft, as annual cloud
revenues reached $US15.2 billion, a 50% year-over-year increase.
"Our results this quarter reflect the trust customers are placing in the
Microsoft Cloud," Nadella said in the earnings statement. "From large
multi-nationals to small and medium businesses to non-profits all over the
world, organisations are using Microsoft's cloud platforms to power their
digital transformation."
This is largely thanks to a thriving Office 365 commercial platform, which
Microsoft revealed has now reached 100 million monthly active users. Revenue
for Office commercial products and cloud services rose 7% during the third
quarter, while the consumer side saw revenue surge by 15% with subscribers
at 26.2 million.
Revenue in Microsoft's Azure business also saw massive gains, rising 93% in
the quarter, and revenue for its Salesforce CRM competitor Dynamics 365,
which it is soon fuelling with LinkedIn data, also grew 82%.
Dragging down these impressive numbers was the company's hardware and
traditional PC businesses, which experienced a 7% dip in revenues. Revenue
for Microsoft's Surface range of tablets and ultrabooks plunged 26% to $831
million from $1.3 billion last year.
This is despite a 0.6% overall increase in PC shipments in the first quarter
of 2017, according to research by IDC earlier in the month.
Microsoft has faced strong competition from new high-end products, and
although a Surface refresh is expected soon, the most recent products have
been on the market for almost two years.
Unsurprisingly the biggest loss came from its struggling Windows smartphones
division. With a loss of $730 million in the last quarter, Microsoft has
reportedly confirmed that there is now very little money left in the
venture, making it possible that Microsoft could scrap development for
Windows 10 Mobile before the end of the year.
However, there was some good news for Microsoft's search platform, Bing,
which has struggled to compete against the more popular Google. The software
unit saw revenues grow by 8%, largely driven by increased revenue per search
and a higher usage volume.
This article originally appeared at itpro.co.uk
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