Microsoft’s Azure cloud revenue doubles, but phone sales plummet
20 July 2016 | 0
Microsoft’s cloud push continued to pay off last quarter, with revenue from its Azure services more than doubling from the same period last year, the company reported.
Overall revenue for the quarter was down, however, thanks partly to a steep decline in Microsoft’s handset business. Total revenue for the three months ended June 30 was $20.6 billion (€18.74 billion), Microsoft said, down from $22.2 billion (€20.2 billion) last year. Net profit was $3.1 billion (€2.82 billion).
Microsoft’s retreat from the smartphone market hurt its device sales significantly. Phone revenue sank 71%, after the company back pedalled from its Nokia acquisition to focus on a few models of Windows phone.
The news came shortly after Microsoft announced that it would miss its goal of having 1 billion devices running Windows 10 by the middle of 2018, in part because its smart phones are not selling well.
Microsoft’s Intelligent Cloud business, which includes Azure services and on-premises server software, performed better, with revenue up 7% to $6.7 billion (€6.1 billion). Azure compute usage more than doubled year over year. Microsoft does not break out a dollar figure for its Azure sales, however, so it is hard to know exactly how large that business is.
Search revenue also grew, by 16%. More than 40% of search revenue in June was driven by Windows 10 devices, Microsoft said. That may have something to do with the fact that Cortana, the virtual assistant bundled with Microsoft’s new operating system, uses Bing to run web searches.
Microsoft’s productivity software business also grew significantly. The number of commercial seats of Office 365 sold grew 45% year-over-year, as more companies migrated to the subscription-based suite.
All in all, the quarter seems to be something of a validation for CEO Satya Nadella’s focus on the cloud, with Office 365 and Azure posting strong growth. That said, the company’s revenue declines still haven’t levelled off, despite the rise in its newer businesses.
IDG News Service