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Xbox One, holiday sales drive Microsoft to record revenue

Mark Hachman | Jan. 24, 2014
Strong holiday revenue drove Microsoft to easily outpace Wall Street analyst estimates, although Windows revenue shrank due to a contracting PC market.

Microsoft also saw Office Consumer revenue drop 24 percent as consumers switched to Office 365, Microsoft said, presumably deferring revenue from a single large, one-time purchase to smaller amounts paid out to Microsoft on an annual basis About 15 percent of all consumer Office licenses came from Office 365, Hood said. 

Windows Phone revenue, however, increased by an undisclosed amount. Earlier on Thursday, Nokia reported a significant drop in phone revenue, the last quarter before its devices business is acquired by Microsoft.

Microsoft's Commercial Licensing business also saw a modest increase of 8 percent in revenue to $10.1 billion. Microsoft attributed the growth to server, volume licensing, and Office licenses, offset in part by the transition of customers to the commercial version of Office 365. Volume Windows licensing grew by 10 percent, Hood said, some of which she attributed to enterprises switching from Windows XP to a more modern Windows OS, either Windows 7 or Windows 8. 

Looking forward, Hood said, Microsoft says it sees a continuation of the trends that drove its second quarter: continued growth in the Xbox One, with an expected hit, Titanfall, on the horizon; flat business PC growth, with "headwinds" in the consumer PC space; and seasonal slowness in the commercial business, she said.


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