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5 major revelations hidden in Microsoft's earnings report

Brad Chacos | July 24, 2014
Financial results are oh-so boring, but Microsoft's latest quarterly results hid a surprising number of juicy tidbits about Surface, Nokia, the future of Windows, and more.

3. Forget One Microsoft, meet One Windows
This shouldn't come as a shock to anyone who's been paying attention to what Microsoft has been saying and doing for the past couple of years, but on last night's earnings call, Satya Nadella reaffirmed Microsoft's plan to restructure its operating system around a central version of Windows, rather than the three distinct operating systems--Windows 8, Windows RT, and Windows Phone--available today.

Here's what he had to say:

"This means one operating system that covers all screen sizes. We will streamline the next version of Windows from three operating systems into one single converged operating system for screens of all sizes... In the past we had multiple teams working on different versions of Windows. Now we have one team with a common architecture. This allows us to scale, create Universal Windows Apps."

A framework for Metro-style Universal Windows Apps is already available to developers, though currently it lets them write code once and port it to Microsoft's Windows Phone 8 and the Windows 8/RT Windows store with only minimal extra work required--meaning it's not quite truly universal just yet.

P.S. Don't interpret this to mean the Windows desktop is dying. It's not.

4. Bad news and good news for the PC market
First, let's look on the bright side: Microsoft's Windows revenue from hardware partners was up three percent! Combined with Intel's surprisingly solid quarterly numbers for PC sales, that's tremendous news indeed for an industry that's been in a bleak decline for years now.

Digging a little deeper reveals some worrying tidbits, however. The slight growth was largely due to an 11-percent increase in revenues from Microsoft's Windows OEM Pro segment--businesses, in other words. Most likely, many of these companies were finally jumping off the Windows XP bandwagon now that the aged OS has officially been put out to pasture, which could mean the increase will prove to be temporary. Glancing at consumer Windows revenues paints a far darker picture: Those sales were down a whopping 9 percent year-over-year. Gulp.

5. Return to roots
That said, Microsoft's core business is still a money-making juggernaut. Despite the lackluster hardware profits, Microsoft still made a hefty $23.4 billion in revenues last quarter alone, with $4.6 billion of that going straight into the bank. The numbers were bolstered by particularly strong business and cloud sales.

One bright spot had everything to do with productivity, but nothing to do with business: Microsoft managed to sign up an additional 1 million Office 365 Home Premium subscribers last quarter, bringing the total number of users up to 5.6 million. The company recently rolled out new Office 365 personal subscriptions and Office for iPad, both of which no doubt helped boost the subscriber count last quarter.


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