Microsoft’s Big Windows 10 Push Is Part of Broader Strategy

Office 365 revenue grew almost 70 percent, a sign of Microsoft’s success at diversifying away from Windows.

The company reported $25.7 billion in revenue, down 2% year-over-year. According to a report from Strategy Analytics, the number hit 1.4 billion in 2015, representing the most smartphones ever shipped in a year.

Microsoft’s revenue from personal computing, which includes the Windows business, fell 5% in the quarter to $12.7bn.

“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”, said Microsoft CEO Satya Nadella in a statement. The company said its Windows 10 offering, introduced last summer, earlier this month was running on 200 million computers, up from 100 million for the period ended in September, Microsoft said.

Since Microsoft reports its Azure revenue within what it calls the Intelligent Cloud division, it’s unclear how much Azure, in particular, raked in; the cloud unit as a whole, however, brought in $6.3 billion, a 5% increase from previous year.

Surface sales bounced 29 per cent in constant currencies to $1.3bn, year on year, as the giant vendor topped revenue and profit targets for the quarter ending 31 December 2015. Nadella claims that there is “real excitement” for coming Windows 10 deployments for business customers. The software behemoth reported adjusted earnings per share (EPS) of $0.78 on revenues of $23.8 billion.

But Microsoft’s Azure cloud, which looks to compete with Amazon Web Services and Google’s Cloud Platform, is still hiding behind the company’s stealthy way of reporting financial results. Nadella has vowed to reshape Microsoft into a cloud- and mobile-first company aimed at being a leading player in enterprise work solutions, an effort to cast aside a losing model in a mobile age that continues to see declining global PC sales.

Overall these are quite positive results for Microsoft with its future-facing businesses, like cloud and Office 365 seeing continued and consistent growth, while its older divisions like Windows are weathering the storms of the PC market and outperforming it.

Microsoft Xbox Live users grew 30% this year, to over 48 million users.

Revenue in the business that includes Windows fell 5 percent to $12.7 billion.

Sales in the “More Personal Computing” group were down 5%, and would have been down 2% in constant-currency terms.