Microsoft's cloud business is growing, but its phone division is nose-diving

Yesterday, Microsoft released third-quarter report of its fiscal year 2015 (3QFY15) with $20.5 million revenue roughly in line with analysts' estimation.

Productivity and Business Processes revenue was $6.5 billion, up 1 percent year on year, with operating income of $3.0 billion, down 7 percent.

"We are the only cloud provider that helps companies embrace the cloud on their own terms", CEO Satya Nadella said in an earnings call. As for server products and cloud services, Microsoft said revenue increased 5 per cent. Azure revenue increased by 120 per cent.

Microsoft said its Intelligent Cloud segment, which includes its lineup of Azure public cloud services, posted a revenue increase of 3% to $6.1 billion.

The company's Surface tablet (which is still not yet available in South Africa) increased its revenue by 61 percent as demand for the Surface Pro 4 and Surface Book increased, and Xbox Live's monthly active users grew 26 percent year-on-year to 46 million subscribers. Last year, Microsoft sold 8 million phones in the same quarter. CFO Amy Hood said results are being hurt by weakness in one-time purchases of software, Bloomberg reported.

Overall one could say this quarter was a rather mixed one for the Redmond giant with a downfall in Windows and phones business whereas steady growth of business across cloud and services segment.

The Intelligent Cloud unit also includes Microsoft's on-prem server software products, including Windows Server and SQL Server. A deteriorating PC market is also another trend that has impacted sales not only for Microsoft but for other major technology companies as well.

Compared to the previous quarter, when Microsoft sold 4.5 million Lumias, the drop does not look quite as bad, although we are still looking at a 48.88 percent decline.

The results showed a two per cent drop in revenue from Windows, the PC operating system which has been the core for Microsoft for years, despite a larger drop in PC sales.

However, while Windows Phone as a platform continues to be a pariah for the company, many of Microsoft's other divisions showed continued growth.

Accordingly, phone revenue dipped 47 percent, dragging down overall device revenue by 11 percent. Even Microsoft's PC business is down 2% in constant currency, which is better than the rest of the PC market.

"We're making Office 365 more than a world-class productivity and communications service", he said.

Search ad revenue grew by 18 percent, thanks to growing Windows 10 usage.

Villa owner Lerner takes blame for relegationThe Saints retook the whip hand in the early stages of the second half, with Rodriguez seeing an effort deflected narrowly wide. Dusan Tadic's double and goals from the impressive Shane Long and Sadio Mane kept their slim Europa League chances open.

Source: Microsoft's cloud business is growing, but its phone division is nose-diving