Microsoft Sales Go Backward As Windows Phone Sales Slump 49%

Although Microsoft said Xbox hardware revenue fell because of lower volumes of Xbox 360 sales, it wouldn't get specific about the number of next-generation consoles it sold during the recent quarter.

Overall, Microsoft raked in a tidy $6.3 billion in profit and $20.4 billion in revenue during the quarter - but it's showing no signs of cracking smartphones.

CEO Satya Nadella has focused on cloud services and mobile applications on slower growth in its traditional software business. Windows 10 adoption continues to outstrip expectations, with roughly 200 million devices running the operating system.

Revenue in its Intelligent Cloud segment grew 5% (up 11% in constant currency) to $6.3 billion. Surface revenue was up by almost a third in constant currency, thanks to the launch of the Surface Pro 4 and Surface Book.

IDC said business should improve later this year as companies that had delayed replacing machines before upgrading to Windows 10 make the switch.

Headline figures for the FY16 Q2 were; a total of $23.8 billion in revenue, generating $5 billion in net income, producing earnings of $0.62 per share.

Microsoft broke with tradition last July by releasing Windows 10 as a free upgrade for older PCs, with no charge for future updates.

Wall Street analysts had been predicting that Microsoft would report earnings of around 71c per share; in the event, the company reported 78c.

In November, Microsoft released the first major update for Windows 10 with solutions created to address business scenarios: security, manageability and ease of deployment.

Additionally, the company's offerings with its XBox Live gaming service has now reached 48 million users, a 30% increase when compared to the same time past year.

Nadella, who was named to the top job in 2014, has been pushing Microsoft to adapt to a world where people are increasingly using mobile gadgets, and where businesses are moving more of their operations to remote data centers, accessed via the Internet. Azure revenue grew 140%, Microsoft says, while Azure compute usage is up nearly 100% compared to past year.

Amazon made $2.4bn (£1.7bn) from Amazon Web Services in its last quarter, so you'd think Microsoft is blowing Amazon out of the water with its $6.3bn earnings, but Microsoft isn't actually so transparent when it comes to reporting on its cloud.

In a phone interview, Amy Hood, Microsoft's chief financial officer, said Microsoft was not yet predicting a turnaround in the PC market.

Source: Microsoft Sales Go Backward As Windows Phone Sales Slump 49%