Microsoft Windows hurt by PC sales slump

Microsoft said Lumia sales plummeted more than 70 percent year-over-year in its third fiscal quarter to just 2.3 million.

Chief executive Satya Nadella said Microsoft was pursuing its shift to business and cloud computing services.

Revenues from the company's Azure platform grew by 120 per cent in constant currency, while Azure compute and Azure SQL database use also more than doubled.

Revenue in Microsoft's intelligent cloud business, which includes the Azure cloud infrastructure and services business as well as products such as server software, rose 3.3 per cent to US$6.1 billion in the quarter. Last month, Microsoft said that 270 million active devices run the new operating system, though many of those are free upgrades. Research firm Gartner said that PC shipment worldwide has declined 9.6% on the YoY basis in the first quarter.

Microsoft Corporation (NASDAQ:MSFT)'s March quarter (F3Q2016) bucked the recent trend in its Intelligent Cloud segment where Azure cloud belongs.

Windows OEM was also down by 2% though the company said that it still outperformed the PC market.

Operating profit at the productivity and business processes group, which includes its Office software, dropped 7 per cent. Revenue grew 1 per cent to $6.5 billion.

However Microsoft's Surface products saw huge growth, up 61 percent compared to previous year and bringing in $1.1 billion revenue. Its cloud services are driving growth, while traditional parts of the company's business are shrinking alongside the PC market.

The vendor now has around 85,000 transacting partners selling the cloud based Office suite to small customers and as a result its revenue from that product line increased.

However, Surface revenue increased by 61% y-o-y growing from $713 million in Q3 2015 to $1.11 billion in Q3 2016.

Office 365's growth is an important metric because Microsoft is working hard to upsell those customers to other cloud services. However, Office 365 grew 70 per cent in constant currency in the period before.

Revenue at the software giant fell to $20.53bn from $21.73bn, lower than the $22.09bn analysts had expected.

In relation to its Xbox division, the company said monthly active users rose 26 percent compared to past year to 46 million users, however the company failed to mention the fact that MAUs fell quarter on quarter by 2 million.

This can be balanced out by arguing that Microsoft hasn't been focusing too heavily on smartphones, and the lack of a new flagship Windows Phone since the launch of Windows 10 a year ago still feels like a big gap that needs to be filled, though such a device still remains out of sight.

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Source: Microsoft Windows hurt by PC sales slump