Satya Nadella, CEO, Microsoft, has put cloud computing at the centre of Microsoft’s strategy and it certainly seems to work, at least, when it comes to attracting investors. The company’s 4.5 million Lumia smartphones sold in the quarter compared to 10.5 million during the same period a year ago.
“Intelligent Cloud”, as Microsoft dubs its division, also covers Windows Server and enterprise software sales, making it hard to pick out just how much Azure made by itself, making a direct comparison to AWS very hard.
After closing Thursday at $52.06, up 1.63 percent, Microsoft’s stock rose more than 3 percent in extended trading after the results came out.
The company’s net income fell to US$5.00 billion, or 62 cents USA per share, in its second-quarter ended December 31 from US$5.86 billion, or 71 cents U.S. per share, a year earlier. Revenue was $25.7 billion or $23.8 billion on a GAAP basis, compared to the consensus of $25.26 billion.
Intelligent cloud revenue rose 5% (up 11% in constant currency) and Windows OEM revenue declined 5% in constant currency. This part of the company makes Azure plus other businesses like Office 365 and it is up 15 percent from the $8.2 billion revenue it estimated last quarter. The two companies are proving to be fierce rivals in the arena of public cloud, where Microsoft is gaining momentum with its Azure product line, which saw a 140% year-over-year jump in revenue in constant currency.
Revenue from Productivity & Business segment declined 2%, down to $6.7 billion, as opposed to the 3% decline in the quarter prior, as the company transitioned from software licensing to Office 365 subscriptions for clients.
The Surface division was one of the highlights of Microsoft’s most recent quarter. However, the good performance of cloud was overshadowed by the continued failure of Windows Phones to get any traction in the market, with only 4.5m devices sold. The company’s gaming and digital content unit similarly reported positive growth, with monthly active users on its Xbox Live platform rising 30% year-on-year, to 48 million.
“Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft’s cloud technologies”.
