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Surface Sales Goes Up Increasing Microsoft Earnings, But Not The Windows Phone

January 30
2:07 AM 2016

Microsoft has gained $25.7 billion revenue, with $6.3 billion in net income, according to the company's report on Q2 fiscal 2016 earnings. The strong contributors to this revenue are from the Surface sales and the cloud and server growth, while Microsoft phones and Windows are still struggling.

After a drop during the last quarter, Microsoft Surface has been increasing year-over-year by 29 percent or $1.35 billion in revenue. As mentioned in The Verge, Microsoft states that Surface Pro 4 and Surface Book are the main drives to the whole Surface incomes.

However, the positive growth is on the opposite of the Microsoft's Windows Phone revenues, which keeps going down 49 year-over-year. Lumia 950 and Lumia 950 XL launched lately have not met their successes in the market. They only sold 4.5 million in the recent quarter, which is much lower than the 10.5 million Lumia phones sales last year.

Meanwhile, Windows 10 that has been launched around six months ago still does not receive good responses. In the latest quarter, there was a 6 percent decline in the Microsoft's Windows OEM Pro income. Eventhough last year's decline is even worse, which touched 13 percent, the total slow growth of Windows and Microsoft phone revenue has significant impacts on the Microsoft's overall return. Microsoft has reported that they are preparing crucial improvements for Windows 10 in the upcoming months.   

According to the International Business Times, Microsoft achieved $0.78 higher earnings per share than what analyst expected as much $0.71. The net income $6.3 billion from $25.69 billion revenue is higher than the $5.86 billion net income from $26.5 billion revenue in the same quarter last year.

Satya Nadella, chief executive officer at Microsoft stated, "Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas. Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices."

There is 70 percent increase in the Office 365 revenue, showing that Microsoft has been successful in separating from Windows. Intelligent Cloud also has gained 5 percent growth as much $6.3 billion, higher than the $6.2 billion estimation. It includes the Azure cloud computing platform that has grown up to 140 percent. 

As stated in the New York Times, Microsoft is estimated to be the number 2 most important segment of the cloud services market, where computer storage and other data centers' services are rented to customers. There is Amazon in the first place, and IBM and Google to follow Microsoft.

An obvious gap comes from Windows 10. It has not shown any positive growth since being launched last July. Microsoft does not charge Windows upgrade any longer with the expectations that developers will return to them again after shifting to Apple's iOS and Google's Android operating system. Therefore, Microsoft has not made any estimation in the PC market.   

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