Azure Up 62%, As Surface Sales Near $2 Billion

Surface Hardware

By now, we all know where the priorities lie for Microsoft. It’s cloud, cloud, cloud, some more cloud, and then the rest of the good stuff like Windows, Surface, and even gaming.

This much has long been clear, and the company’s latest earnings report simply solidifies this.

The overall numbers are a reflection of where the company is heading, but there is some good stuff hidden among these figures for consumer as well. Even as enterprise success is hogging up all the headlines.

Let’s get that out of the way, first.

In general, Microsoft beat analyst projections with a strong quarter, thanks primarily to the impressive performance of Azure and Office. The key numbers are $36.9 billion in total revenue with a net income of $11.6 billion, over analyst predictions of $35.7 billion.

The important takeaway is that the company is still in a very good position to make up ground against cloud leader Amazon.

Well, as long as court disputes are settled without anyone losing an eye!

The cloud and productivity divisions each delivered around $11.8 billion in revenue, with Azure revenue specifically increasing by 64%. The Intelligent Cloud business overall recorded $11.9 billion in revenue, growing by a whopping 27%.

This means that Intelligent Cloud once again edged out the Productivity and Business Processes division in terms of revenue.

For consumers, though, the high point of these results is that Microsoft reported $1.98 billion in Surface sales alone. Interestingly, as CFO Amy Hood makes clear, these numbers could have been even higher, if not for unexplained execution challenges in the consumer portion of the Surface business.

CPU shortages from Intel, and other hiccups in the hardware supply chain.

That said, the company also acknowledged that it faces more uncertainty in the consumer business than in the past. Revenue is expected to drop fairly substantially in these next three months.

Which has all got to do with seasonality, as people buy far less hardware than they do during holidays.

Consumers, at least, also have another thing to look forward to.

The company’s Project xCloud, which will allow consumers to play games on their mobile phones directly from the Azure cloud. It, the company says, has already attracted hundreds of thousands of users, which could be a sign of things to come.

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