Microsoft has posted a surprising revenue of $20.6 billion USD in the fourth quarter of its 2016 financial year largely due to the success of Windows 10.
As Basil Fawlty once opined ‘don’t mention the war’, don’t mention Windows Phone. Microsoft has posted a $20.6 billion USD revenue in the fourth quarter of its 2016 financial year, which is a decline of 7% year-on-year.
The company, however, achieved an operating income of $3.1 billion USD, compared to the $2.1 billion dollars it lost in the same period last year. The firm’s net income of $16.8 billion is up 38% compared to the company’s fourth financial quarter last year.
Read: Windows Phone market share is now officially below 1%
Microsoft reported year-on-year growth across every product segment and noted the successes of its Cloud business – most noticeably Office 365 and Azure, which showed the largest gains.
Unpacking the report
Exploring Microsoft’s reporting segments, which are divided into three fields – Productivity and Business Processes (Office, Exchange, SharePoint, Skype, and Dynamics), Intelligent Cloud (including Azure, Windows Server, SQL Server, Visual Studio, and Enterprise Services), and More Personal Computing (Windows, hardware, Xbox, search, and advertising), the report revealed that:
- Productivity and Business Processes posted a revenue of $7 billion, up 5%, with an operating income of $3 billion, down 5%.
- Intelligent Cloud revenue reached $6.7 billion, up 7%, with an operating income of $2.2 billion, down 17%.
- More Personal Computing reported a revenue of $8.9 billion, down 4%, with a surprising operating income of $1.0 billion, up a massive 59%.
The latter success is a complicated event; the report shows that consumer sales (non-Pro Windows revenue) was up by 27%, while professional Windows revenue (corporate sales) was up by just 2%.
The company continues to hemorrhage on its device sales, with total hardware sales dropping by 35%, indicative of a 71% drop in phone sales. Surface revenue rose by 9%, and posted a yearly revenue of $4.1 billion dollars.
Xbox revenue fell by 9%, but revealed a growth in gaming hours (13% on the Xbox One, 19% on Windows 10) while Xbox Live grew to 49 million monthly active users.
Surprise, surprise
The world’s least favourite search engine, Bing, showed profitable results, and posted a revenue growth of 54%. The results show just how central Windows 10 and Cortana’s use of the search platform has been – over 40% of all Bing queries came from Windows 10 devices.
While Microsoft’s failures in its hardware business – Windows 10 Mobile, particularly – offset the growth seen in Windows and Bing, the results are a positive indication for the company, which increasingly is hedging its bets on the Cloud and its Windows Everywhere strategy.
A new hope
Should the firm proceed to introduce a Surface Phone to complement its lineup of Surface hybrid laptops, the company could move to recoup the loss it has seen on its Nokia acquisition should it produce a successful device. The move is a likely one, as Microsoft’s Corporate Vice President for Surface Computing, Panos Panay, recently stepped in to take over the company’s mobile hardware business.
Read: Redmond registers “˜SurfacePhone.com‘
What are your thoughts on Microsoft’s results? Share your opinion in the comments below!
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