Microsoft Revenue Increases from Cloud Services
Microsoft has sold far fewer Windows licenses in the first quarter of this year, but at the same time gained much more from its Internet services, including Azure and Office 365. In total, Microsoft made more revenue, but less profit.
In the past quarter, Microsoft took significantly less in the sale of licenses, including Windows and Office: consumers sales declined there by 24 percent, to $ 3.5 billion.
At the same time sales declined from the sale of licenses to companies by 3 percent, to $ 10 billion. Especially the sales of Office declined sharply: Microsoft earned 41 percent fewer Office licenses. That is according to Microsoft because consumers switched to Office 365, the subscription model for Office. According to Microsoft, there are also fewer Windows licenses sold because companies are upgraded from Windows XP to a newer Windows version. Additionally, Microsoft does not charge licensing fees anymore for devices with screens smaller than 9 “.
However, Microsoft earned much more with its internet services. This should not only include its search engine, which gained 21 percent more, but also its branch with Business Cloud Services. That in particular gained 106 percent more revenue, primarily due to increased interest in the business version of Office 365, Azure and Dynamics. It is unclear how much more Microsoft gained for its Internet services for consumers; Microsoft puts them under one heading “Other” together with Bing and Xbox. That branch earned 25 percent more, namely 2.2 billion dollars. Microsoft does indicate that the number of subscribers of the consumer version of Office 365 increased by 35 percent compared with a year earlier, to 12.4 million in total.
Sales from selling Windows Phone licenses fell by 16 percent, according to Microsoft, mainly because more cheap Windows Phone devices were sold, from which Microsoft earns less. The phone branch of Microsoft, which is in fact the part of Nokia that Microsoft bought last year, has earned $ 1.4 billion last quarter. Microsoft sold 8.6 million Lumia devices. The sale of Surface tablets increased: there Microsoft earned $ 713 million, a 44 percent increase.
Further More, Microsoft earned 49 percent more sales of first party games, largely thanks to Minecraft, which Microsoft bought last fall for two billion dollars. With the Xbox division however, Microsoft earned 24 percent less, mainly because of the price reductions of the Xbox One. Also fewer Xbox Ones were sold.
In total, Microsoft earned 21.7 billion dollars in the first quarter, which is 6 percent more than a year ago, when Microsoft earned 20.4 billion dollars. Operational profit, a good indicator of the financial health of a company, however decreased from $ 7 billion to 6.6 billion. That is according to Microsoft because of the $ 190 million of costs incurred for the integration of Nokia in the company, and the high price of the dollar.