Windows 10 plays minor role in Microsoft Q1 results

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Expectation-busting results support Nadella's new direction

MICROSOFT'S FIRST-QUARTER results have met with a mixed reception from the industry as key elements saw rises while others continued to decline.

The bottom line figures were slightly above expectations, showing revenue of $20.4bn for the quarter to September, representing a year-on-year decrease of 12 percent, which was significantly less than many had predicted. But profits were up slightly from $4.54bn to $4.62 against these lower sales.

Microsoft has continued to expand its reach into cloud and enterprise under the leadership of CEO Satya Nadella, and these growth areas have supported less successful elements such as the hardware side, which took a severe knock following the decision earlier this year to write off billions after the under-performing takeover of Nokia's mobile division.

The launch of Windows 10 failed to ignite huge interest in licensing from OEMs, and a six percent decrease made it the fifth quarter in a row that Windows has seen a decline - although the drop is now slowing. And Microsoft was keen to remind us that this decline is better than the overall PC market, using that as evidence of Windows 10 success.

This was countered by subscriptions from services such as Xbox Live and Office 365, which has blossomed as customers embrace the software-as-a-service, by-the-month model.

Propping up the company coffers was a 70 percent increase in revenue from enterprise cloud compute. Microsoft has been working diligently to increase its offerings in this area, using data centres in multiple territories to win the trust of companies that rely on a safe harbour away from the prying eyes of local laws.

The other newer market to show significant growth for Microsoft is ad revenue through Bing, which hit $1bn to turn in the division's first profit.

There was an eight percent surge in Microsoft's share price during late trading on Thursday after the earnings call, but hardware manufacturers relying on Windows to power their products will view the lacklustre profits from the once core operating system as a sign that they need Microsoft more than Microsoft needs them.

Next quarter's results will still be too early to see how the last piece of the puzzle for Windows 10, the Windows 10 Mobile edition which has been 'delayed' or 'never formally announced' depending on your point of view, will affect the holistic OS strategy, but in the meantime Microsoft's fingers are firmly jammed into other pies.

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