Microsoft Q1 2017: huge cloud growth, big Phone drop

microsoft build 2015

Microsoft has seemingly hit the purplest of its purple patches this week, after the Redmond-based company announced its Q1 2017 earnings.

Shares ballooned to US$60.43 — at one point, a jump of nearly 6.3% — adding around US$25-billion to its market cap. The company’s CEO Satya Nadella, was pretty happy to say the least.

“We are helping to lead a profound digital transformation for customers, infusing intelligence across all of our platforms and experiences,” he explains.

“We continue to innovate, grow engagement, and build our total addressable market.”

Microsoft’s Windows 10 is flat, its phone business is dying but its cloud portfolio is soaring

But the protagonist of this enormous jump wasn’t Windows 10, its hardware line, or the Xbox product portfolio, but rather its cloud products. The “intelligent cloud” sector jumped an impressive 8.3%, beating investor estimates in the process, and pushing the company to its highest stock price this decade.

Leading the cloud charge is its Azure platform. The service grew 116% (up 121% in constant currency) in terms of commercial revenue with “compute usage more than doubling year-over-year”.

While its intelligent cloud services saw a jump, its cloud-based Office 365 platform also saw a 51% spike in commercial revenue in the quarter. Search is also up around 9% thanks to “increased revenue per search and search volume”.

Not all sunshine and rainbows

Not everything is awesome for Microsoft though.

Its Phone business is down a 72%, while Windows OEM and Windows commercial products were both fairly flat.

Finally, as mentioned earlier, Microsoft’s Xbox platform is down a meagre 5%, citing a slow-down of Xbox console purchases, even though Microsoft has outsold Sony’s PlayStation 4 in the past three months.

Andy Walker


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