Microsoft today announced its second quarter earnings for the fiscal year 2016 which reveals a mixed bag of results that includes some significant gains as well as some loses.
As per the report, the Surface Pro 4 and Surface Book introduced just year are already proving to be a hit, contributing to 29% increase in revenue. This translates to $1.3 billion in revenue generated during the period, which marks an increase over $1.1 billion YoY.
Surface contributed to an increase in revenue of $248 million or 22% riding on the demand for the Surface Book and Surface Pro 4 devices which continues to remain strong. This managed to balance out the decline in revenue from Surface Pro 3.
However, the gains made in the devices revenue have been nullified to some extent with the rather steep decline in the sale of Lumia range of smartphones. As per the figures released in the earnings report, there were 4.5 million Lumia phones and 22.5 million other phones sold in the fiscal year 2016 Q2, which marks a significant drop over the 10.5 million Lumia and 39.7 million other phones that Microsoft has sold during the same period last year.
All of the above makes for a 53% or $1.2 billion decline in revenue from Microsoft’s phone division
Microsoft though experienced strong demand for the Xbox One gaming console which registered its highest ever monthly sales ever experienced in Xbox history in December 2015. Microsoft, however, hasn’t revealed exactly how many units of the Xbox One were sold during the holiday season but stated Xbox Live monthly active users witnessed a growth of 30% YoY to a record 48 million.
“It was a strong holiday season for Microsoft highlighted by Surface and Xbox,” said Kevin Turner, chief operating officer at Microsoft. “Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online.”
The Productivity and Business Process Division is reporting a 5% increase in revenue in constant currency, which translates to total revenue of $6.7 billion during the period.
Other highlights from the P&BPD include an increase in Office 365 consumer subscription base to 20.6 million while revenue from Office commercial products and cloud services grew 5% in constant currency.
“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas,” said Satya Nadella, chief executive officer at Microsoft. “Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices.”
All that Microsoft needs right now is a strong growth oriented long-term strategy in the smartphone segment that should be centered around a more efficient and robust Windows 10 Mobile iteration.