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Microsoft actually doing quite OK, thanks Featured

Microsoft has defied the doomsayers – and Wall Street – by posting record revenues in the last quarter.

Microsoft’s revenues in the December quarter were a whopping US$24.5 billion, up 14% from the same quarter a year ago. The growth was driven by Xbox and tablet sales – Surface tablet revenue more than doubled over the previous quarter.

Commercial revenue (the heavy duty enterprise products like SQL Server and Dynamics) also grew strongly, by more than 10%. It now comprises more than 12% of Microsoft’s business.

Net income (profit) was flat, up only 2%, but the results far surpassed analyst’s estimates and Microsoft shares rose 3% on the news. The only bad news was consumer software licensing – the Windows and Office business, where revenue dropped by 6% as PC sales worldwide continue their long decline. But Microsoft does not rely on that stuff so much any more.

The results show Microsoft remains a major force in the industry. Any talks of its demise, or even decline, are premature. The company is doing a very good job of reinventing itself – and these numbers do not yet reflect the smartphone business it is in the process of acquiring from Nokia.

Smartphones will be an important part of Microsoft’s future. Nokia has managed to vastly increase market share and shipments of Lumia Windows phones since the deal was announced (though shipments slipped a little last quarter), and in many markets Windows Phone is now second to Android, outselling the iPhone.

Microsoft will inherit a healthy smartphone business, its tablets and game consoles are booming, and its enterprise business is growing strongly. PC software is down, but times change. All the signs are that Microsoft is changing too.

CEO Steve Ballmer’s successor will take over a healthy giant on the cusp of Big New Things. He is making the right decision in leaving – it’s time for new blood and fresh ideas. Who moves into the role is the biggest guessing game in the industry – but it’s not exactly the poisoned chalice many doomsayers thought it was.


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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.


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