Microsoft Q2 2015: Surface and Lumia high, but Xbox and profits low

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Microsoft has announced its financial outcome for the quarter that ended in December 2014. The company made $5.8 billion in net income on $26.5 billion in revenue, taking a leap of 8% in revenues compared to the December 2013 quarter. However, it lost in terms of profit, as in 2013 the net income was $6.5 billion.

Also, the company made an expense of $243, which is related to the sustained integration of the Nokia Devices and Services division. The Nokia service and product division has been doing well, it sold 10.5 million Lumia smartphones, which is an increase from 8.2 million a year ago and 9.3 million in the second quarter.

The revenue has decreased as the market regenerates towards the cheaper aspect of the Lumia line. On the whole, phone hardware fetched $2.3 billion in revenues. The feature phone division sold 39.7 million phones, declining alongside the market for non-smart phones.

Microsoft Q2 2015

Surface tablet, another part of Microsoft’s hardware unit, recorded a 24% growth driven by the Surface Pro 3. In total, it brought in a revenue of $1.1 billion, which is an increase from $908 million in the last quarter.

Microsoft’s another big hardware line, Xbox, sold 6.6 million consoles (including Xbox 360 and Xbox One), a decrease from 7.4 million units sold in last year. The Xbox One price had witnessed much fluctuation, but eventually settled on $350 (without Kinect). The price decline may have driven the sales up, but revenue is down 20% year over year. Microsoft did not clear the Xbox One share in the total sales.

Microsoft Q2 2015

The company’s usual achiever, Windows, had a 13% drop in revenue from Original Equipment Manufacturers (OEMs). One of the reasons behind the decline is the new array of low-cost devices (some of which cost as much as Windows license). Also, many businesses are showing reluctance in buying the Windows 8 and are rather stuck on the Windows XP.

Microsoft also took a step to merge its platform by enabling free upgrades for Windows 7 and 8 to the latest version. This move will result in the unification of the slow ecosystem and the universal apps will boost the phone OS by making it easy for developers to make an app for both desktop and phone with minor efforts.

The cloud services are also doing pretty well with an increase of up to 9% in the revenue for Microsoft’s server services and more than twice for its cloud services. Microsoft’s Office 365 in particular witnessed a growth of 9.2 million users, which is an increase from 3.5 million users in the year 2013. An increase of user base for Office 360 took a toll on desktop Office, which has recorded a decline of 25%.

Microsoft Q2 2015

Microsoft’s search engine, Bing, fetched in 23% more search revenue and ended the year 2014 with 19.7% of market share in the US. Bing’s higher integration with the desktop (through Cortana) shall give it more boost towards earning a better market share.


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