27th January 2015
Microsoft have just released their financial performance data for the 3 months up to December 31, which show that the company has had a strong finish to the year thanks to growth across a number of areas of their business.
In total, Microsoft’s revenue for the quarter was just under $26.5 Billion dollars, and profits were $7.8 Billion. The total revenue had increased by 8% compared to a year ago, while profits have slipped slightly by 2%. The drop in profits has been attributed to the ongoing costs of integrating the Nokia business into Microsoft.
The headline growth in revenues for Microsoft were impressive, but the underlying numbers demonstrated some of the big challenges that the company is facing as the IT industry evolves, and the ways in which Microsoft’s shift in focus toward the cloud and an integrated experience for users is leading to major new opportunities.
Over the past 12 months, a lot has been written about how the change in user behaviour and growth in the tablet market has affected PC sales, and this is reflected in a drop in revenues for Windows. OEM sales of Windows licenses dropped by 13% across both Professional and non-Professional (consumer) product sets. The launch of Windows 10 later this year is likely to reverse these numbers slightly – although the news that the software will be a free upgrade for Win7 and Win8.1 users means that a former revenue channel has been closed.
Microsoft recorded a drop of 1% in revenue across Office and other commercial products. A number of factors drove this change including the lack of a new retail version of Office in 2014, and the planned migration of users over to the subscription model of Office 365. Indeed, cloud services were the area of biggest growth for the company.
Cloud services have become one of the biggest drivers of revenue for Microsoft over the past 12 months. The combined revenue from Azure, Office 365, and Dynamics CRM Online grew by 114% compared to the same period in 2013, and is projected to hit $5.5 Billion for the year. Microsoft’s strategy of Office Everywhere appears to be paying off, with the iPad and iPhone versions of the software topping the charts in the App Store and the Android Tablet version of Office launching in Beta.
Microsoft’s cloud strategy has been a key driver in business adoption of new technologies, and is also an increasing part of igroup’s business, with many of our clients choosing the benefits of the online versions of SharePoint thanks to its integration into the Office 365 environment.
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