Microsoft reported that its Surface tablet sales brought in a record $1.1 billion in revenue during its financial second quarter, which spans the Christmas period. It also sold 10.5 million Lumia smartphones during the period. Both those figures are records for the company with Surface revenue up by about 20 per cent and Lumia sales volume up by about 13 per cent quarter on quarter.
Considering the above two important devices to Microsoft, TechCrunch said that both growth figures will be pleasing but don't represent 'scorching growth'. As in income generator Surface is doing just fine, as it will never be the cornerstone of Windows PC computing. However as Lumias are the only Windows smartphones to sell in any number, and thus the whole ecosystem rests upon their fate, building handset sales volume is vital. Smartphones are also, of course, part of Microsoft's Windows 10 "universal platform" which aims to unite phone, PC and TV.
In the more general results last night Microsoft reported profits of $5.86 billion compared with $6.56 billion a year ago. Reuters reports that sales rose eight per cent to $26.47 billion, mostly due to the Nokia devices acquisition. However Microsoft's key business of Windows software didn't do well in the most recent quarter. Windows sales are sluggish although the market demand seems to be stabilising. Furthermore the strong US Dollar had an impact on profits brought in from overseas.
Breaking down the Windows revenue resulted in the following numbers:
- Windows OEM Pro revenue declined 13 per cent
- Windows OEM non-Pro revenue declined 13 per cent
- Windows volume licensing revenue increased by 3 per cent
Satya Nadella, chief executive officer of Microsoft looked to the future, in his financial results statement, and said "We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories, and new opportunities to our customers."
Microsoft shares have reached 14 year highs over the last few months but dipped a little in after hours trading, following these Q2 results. Is the dip a blip – or will the strength of new and upcoming services, devices and software, including Windows 10, keep the share price momentum building?