Microsoft's Azure cloud revenue doubles, but phone sales plummet

Azure is going strong, but Microsoft's phone retreat is costing it

Microsoft's cloud push continued to pay off last quarter, with revenue from its Azure services more than doubling from the same period last year, the company reported Tuesday.

Overall revenue for the quarter was down, however, thanks partly to a steep decline in Microsoft's handset business. Total revenue for the three months ended June 30 was $20.6 billion, Microsoft said, down from $22.2 billion last year. Net profit was $3.1 billion.

Microsoft's retreat from the smartphone market hurt its device sales significantly. Phone revenue sank 71 percent, after the company back pedaled from its Nokia acquisition to focus on a few models of Windows phone.

The news came shortly after Microsoft announced that it would miss its goal of having 1 billion devices running Windows 10 by the middle of 2018, in part because its smartphones aren't selling well.

Microsoft's Intelligent Cloud business, which includes Azure services and on-premises server software, performed better, with revenue up 7 percent to $6.7 billion. Azure compute usage more than doubled year over year. Microsoft doesn't break out a dollar figure for its Azure sales, however, so it's hard to know exactly how large that business is.

Search revenue also grew, by 16 percent. More than 40 percent of search revenue in June was driven by Windows 10 devices, Microsoft said. That may have something to do with the fact that Cortana, the virtual assistant bundled with Microsoft's new operating system, uses Bing to run web searches.

Microsoft's productivity software business also grew significantly. The number of commercial seats of Office 365 sold grew 45 percent year-over-year, as more companies migrated to the subscription-based suite.

All in all, the quarter seems to be something of a validation for CEO Satya Nadella's focus on the cloud, with Office 365 and Azure posting strong growth. That said, the company's revenue declines still haven't leveled off, despite the rise in its newer businesses.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Microsoft

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Blair Hanley Frank

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?