★ Microsoft Misses on Revenue as Hardware Weakness Partly Offsets Cloud Strength (Apr 27, 2017)

Microsoft was one of numerous big tech companies that reported Q1 2017 financial results (its fiscal Q3 results) this afternoon, and the only one of the big three to miss on revenue. That revenue miss was largely due to a shortfall in hardware revenue as Surface had its first big year on year decline in a year and a half due to a lack of new mass market hardware, and phone revenue dropped to essentially zero. However, these two businesses together make up just 4% of Microsoft’s revenue, which continues to be dominated by software and to an increasing extent services, while growth is dominated by the move to the cloud. Microsoft’s cloud revenue run-rate is now at an annualized $15.2 billion, compared to Amazon’s $14.5 billion in actual annual revenue, though Microsoft’s definition of cloud here is far more expansive than Amazon’s. The productivity business had a particularly strong growth quarter at over 20%, while the Intelligent Cloud segment also improved a little to just over 10%. But margins continue to  fall overall as the newer cloud services generate less profit than Microsoft’s old massively profitable software business did, and that picture isn’t likely to change. Microsoft is growing again after both lapping the introduction of Windows 10 and the revenue deferral associated with the new business model, and also getting past the biggest drops in the phone business, but it’s mostly doing so by doubling down on enterprise products and services while its consumer and hardware businesses mostly continue to struggle to find growth.

via Microsoft

The company, topic, and narrative tags below will take you to other posts with the same tags. The narrative link(s) will also take you to the narrative essay which provides additional context behind the post.

• Azure
• Microsoft
• Windows

• Cloud
• Earnings
• Hardware
• Operating systems
• Productivity
• Q1 2017
• Software

• Microsoft's Comeback
• Microsoft's Hardware Push
• The Decline of PCs

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