Microsoft Azure revenue jumped 116% in Q1 2017

Other areas of Microsoft, however, saw declines. The forecast for revenue is $21.71 billion, also slightly higher than last year’s $21.66 billion.

The company has an 8 percent increase to $6.4 billion in revenue in Intelligent Cloud, the business unit that includes the Microsoft Azure cloud computing service and Microsoft’s other tools for servers and data centers.

Azure revenue grew by 116 percent year over year, and Microsoft revealed for the first time that its profit margin from its cloud platform is 49 percent.

If rumors are to be believed, the Microsoft Surface Pro 5 will come in two variants – one with 4K display and a 2K display.

Net income fell 4 percent to $4.69 billion from a year earlier. Analysts on average estimated profit in the period ended September 30 would be 68 cents on revenue of $21.7 billion, according to data compiled by Bloomberg. Over in the Productivity and Business Processes unit, Microsoft’s Dynamics products and cloud services revenue grew 11%.

Sales of the company’s Surface line of tablets and laptops grossed $926 million in the past quarter, up from $672 million a year ago. The Microsoft Ignite 2016 keynote was unambiguous about the future of IT, casting it as a cloud-based operation where jobs would combine technical deployment skills with business strategy.

Excluding items, Microsoft earned 76 cents per share, beating analysts’ average estimate of 68 cents, according to Thomson Reuters I/B/E/S. Total payment volume was $87 billion, representing growth of 25%, “which was faster than the growth rate of e-commerce”, the firm said. That helped lift revenue in the operating segment that includes commercial cloud services and online subscriptions by 6 percent from the same time past year to $6.7 billion.

Areas of weakness included flat Windows OEM revenues, a 72% decline in phone revenues and a 5% drop in gaming revenues.

Revenues for the quarter rose to $20.45 billion from $20.38 billion past year.

The company said that it expected the LinkedIn acquisition to close next quarter. Commercial 365 seats were up 40 percent year on year, and consumer seats now number 24 million.

Long known for its Windows software, Microsoft has shifted focus to the cloud where it is dueling with larger rival Amazon.com Inc to control the still fledgling market. “We continue to invest, position ourselves for long-term growth, and execute well across our businesses”.

Meanwhile, Microsoft’s Personal Computing segment, which includes the Windows, Surface, and Xbox businesses, is expected to hold its own.