Microsoft: Surface revenues doubled to US$893m in Q2

24 Jan 2014

Microsoft CEO Steve Ballmer

Software giant Microsoft has reported profits of US$7.97bn on revenues of US$24.52bn for a second quarter that saw revenues from its Surface line of tablet notebooks double to US$893m, as well as some 3.9m Xbox One consoles sold in their first five weeks.

While Microsoft may have fumbled, stumbled and appeared somewhat aloof to obvious trends in smartphone and tablet computing, reports of the software company’s demise have been somewhat exaggerated.

As the company searches for a new CEO it appears to have found its footing again.

While staple markets for Microsoft like cloud, enterprise and server software have always performed well, more consumer-sensitive markets driven by shifts in technology that contributed to the decline of the PC as we know it may have not.

That said, Microsoft said that its Devices and Consumer revenues grew 13pc to US$11.9bn.

Progress in Devices and Consumer segments

“We delivered record revenue as demand for our business offerings remains high and we made strong progress in our Devices and Consumer segment,” said Amy Hood, chief financial officer at Microsoft.

“These results reflect our focus on execution, cost discipline, and long-term shareholder value as we continue to drive the strategic transformation of the company.”

Windows OEM revenue declined 3pc, reflecting strong 12pc growth in Windows OEM Pro revenue, offset by continued softness in the consumer PC market.

Surface revenue more than doubled sequentially, from US$400 million in the first quarter to $893 million in the second quarter.

The company sold 7.4 million Xbox console units into the retail channel, including 3.9 million Xbox One consoles and 3.5 million Xbox 360 consoles.

Bing search share grew to 18.2pc and search advertising revenue grew 34pc.

The business picture

Microsoft said SQL Server continued to gain market share with revenue growing double-digits. System Center showed continued strength with double-digit revenue growth.

Commercial cloud services revenue more than doubled. It said Office 365 commercial seats and Azure customers both grew triple-digits.

“Our Commercial segment continues to outpace the overall market, and our Devices and Consumer segment had a great holiday quarter,” said outgoing CEO Steve Ballmer.

“The investments we are making in devices and services that deliver high-value experiences to our customers, and the work we are doing with our partners, are driving strong results and positioning us well for long-term growth.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years