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Microsoft Mobile

Microsoft has a lot of ground to cover in the mobile segment as the Lumia sales continues to decline even though Surface managed shore things up a bit with better sales.

Microsoft has come up with its earnings for the third financial quarter of 2016 which unfortunately paints a not so cheery state of affairs at the Redmond-based company. The software maker reported less revenue, income and earnings compared to what the company managed during the same period a year ago.

For the number crunchers, Microsoft reported revenue of $20.5 billion for the third quarter of 2016 fiscal year which reflects a decline of 6 percent compared to Q3 2015. Similarly, operating income and net income reported is $5.3 billion and $3.8 billion respectively, both of which marks a decline of 20 percent and 25 percent compared to the same period a year ago.

Not surprisingly, Microsoft’s decline in the mobile space continues unabated with just 2.3 million Lumia devices sold. It represents a steep 73 percent decline in sales through the corresponding drop in revenue is a more moderate 43 percent. This shows Microsoft pushed more high-end Lumia devices during the period than low-end devices. Also, with that many Lumia devices sold, Windows Phone will end up having just around 0.5 – 0.6 percent share of the mobile market.

Microsoft though stated they are bracing for even more tough days ahead with inventory pile up at the retailers end while shipments take a tumble in the following quarter.

Elsewhere, the numbers are a bit more encouraging. For instance, the Productivity and Business Processes (PBP) division which includes Office, and Dynamics reported revenue of $6.52 billion for the quarter which marks an increase of 1 percent on a year-over-year basis.

Microsoft also stated the user base of the consumer version of Office 365 increased by 79 percent – from 12.4 million a year ago to 22.2 million this year. Those using Office 365 commercial has now grown to 70 million, up 57 percent over a year ago.

The Intelligent Cloud segment that includes server and server products, as well as the cloud infrastructure such as Azure, reported revenue of $6.10 billion for the said quarter, which is an increase of 3 percent year-over-year.

The Surface division continued with the good showing, with revenue increasing 61 percent year-over-year. This marked the second consecutive year for Surface to come up with more than a billion dollars in revenue. While that somewhat negated the poor showing of the mobile segment, the Surface segment itself is poised for better growth with consumer interest showing a bend towards two-in-one devices.

Overall, it’s a tricky patch that Microsoft is having to wade through at the moment as it reinvents itself in the new age where consumers are inclined more towards handy mobile devices than the desktop PCs of yore. Businesses too have evolved to service this segment, which further underscores the importance of the mobile segment itself and the dire needs for it to shore up its act in this hugely competitive but lucrative segment.

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