Microsoft boasts of Surface, cloud growth

October 24, 2014 // 12:35 p.m.

Tags: #1q2014 #azure #cloud #financial #microsoft #nokia #office-365 #satya-nadella #surface #surface-pro-3 #xbox #xbox-360 #xbox-one

Microsoft has released its quarterly financial reports, and it comes with a surprise for those who had previously doubted the sanity of its commitment to the Surface tablet family: 127 per cent growth year-on-year.

The company's figures, released late yesterday, show $23.2 billion in revenue for the first quarter of its 2014 financial year with $5.84 billion in operating income. Those numbers suggest a company in flux: while its revenue is an impressive 25 per cent up year-on-year, its operating income - profit, to non-accountant types - is down eight per cent. There's a reason for that dip, however: the company's Nokia acquisition, which along with its own internal restructuring expenses put a $1.14 billion hole in its profits for the quarter.

'We are innovating faster, engaging more deeply across the industry, and putting our customers at the centre of everything we do, all of which positions Microsoft for future growth,' claimed Microsoft chief executive Satya Nadella of the results. 'Our teams are delivering on our core focus of reinventing productivity and creating platforms that empower every individual and organisation.'

Microsoft enjoyed considerable growth in its Devices and Consumer division over the quarter, ending on a 47 per cent revenue increase. Much of this, in news that will surprise the nay-sayers, came from the company's Surface arm: popularity of the Windows 8.1-based Surface Pro 3 drove that arm's revenue up to $908 million, a far cry from the massive and expensive flop of the company's original Surface products. The Xbox section of Devices and Consumer also did well, boasting a 102 per cent increase to 2.4 million units sold - although these figures are sell-in, not sell-through, and include both the Xbox One and its last-generation predecessor the Xbox 360.

The company's Commercial division didn't grow so fast at 10 per cent for the quarter, but with $12.28 billion in revenue compared to $10.96 billion for Devices and Consumer it still remains the company's primary source of income. The big take-out from the Commercial division is astounding growth in the company's cloud computing segment, which grew its revenue 128 per cent over the quarter thanks to strong uptake of its Azure cloud platform, Office 365 productivity platform and Dynamics customer relationship management system. Server products and services grew 13 per cent, while Windows volume licensing grew 10 per cent in a sign that the market for traditional PCs is entering genuine recovery.

More details on the company's financial report are available in the official press release.
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