HomeWinBuzzer NewsMicrosoft FY16 Q2 earnings analysis: Surface, Lumia, Xbox, Azure, Bing

Microsoft FY16 Q2 earnings analysis: Surface, Lumia, Xbox, Azure, Bing


's quarterly revenue reports suggest increased for Surface devices, Xbox, cloud products, Bing and enterprise software, but steep losses in mobile sales.

Microsoft has released its fiscal year 2016 second quarter earnings and losses, showing profits in most of its endeavors.

Despite the plummeting sales of Microsoft's troubled lineup, the company drives forward with impressive earnings from other divisions.

Surface lineup receiving strong positive response

Microsoft invested into its Surface lineup almost the same as for its Lumia brand. But unlike Lumia, Surface convertibles have become a big cash-cow being the best-selling devices that Microsoft has to offer.

The latest financial figures report that the Surface lineup sales are up 29 percent, with Surface Pro 4 and Surface Book leading the charts.

Microsoft´s CEO Satya Nadella stated in his conference call with investors that the Surface tablet has been a successful product both in the consumer and the enterprise market. Nadella credited the success of Surface to its powerful hardware and the recent adoption of Windows 10, which improves the functionality of desktops, as well as tablet PCs.

Microsoft suffers at the hands of Lumia

Compared to 2014 figuress, Microsoft´s Lumia phone sales have dropped to less than half. From 10.5 million Lumia sold in 2014's second quarter down to just 4.5 million in the second quarter of 2015. The Lumia brand has suffered a 49 percent drop in sales, jeopardizing Microsoft's survival as a major mobile manufacturer.

In December Microsoft has just launched two new premium flagship , the Lumia 950 and 950 XL.

Xbox Live now larger than ever

Despite the heavy competition from Sony's PlayStation, Microsoft Xbox continues to be profitable, with 30 percent growth recorded in the second quarter. The latest number of Xbox Live membership gaming service users has reached an all-time high for the company, with 48 million active users worldwide.

The released figures report only the active Xbox Live memberships, sales figures for Xbox 360 and Xbox One are missing. In 2015 Microsoft changed its reporting practices for Xbox consoles and does not report those figures anymore.

Xbox One Elite console could have been a contributor to Xbox sales and Microsoft's decision to bring Windows 10 to the Xbox One should have also led to increase global interest.

Microsoft's bet on cloud computing pays off

Ever since Satya Nadella took charge of Microsoft, he paid special attention on cloud computing and mobile applications. In 2015, Microsoft´s “intelligent cloud” activities which relate mainly to and its Azure cloud computing platform have risen five percent, gaining 6.3 billion in revenue.

Aggressive cost cutting and smart marketing have helped Azure and other enterprise cloud services such as Office 365 to increase revenue by 15 percent from the last fiscal quarter.

Overall business-activities which include Windows have dropped five percent. However, sales are expected to go up soon as companies begin migrating to Windows 10 during 2016.

Windows 10 gives Bing a boost

After being beaten around by Google Search for years, things seem to be turning around for Microsoft's Bing as it reports a 21 percent increase in global traffic. A new partnership with AOL and has helped the search engine spread its wings and generate $1 billion in revenues this quarter.

Microsoft also reported that 30 percent of all the search revenue in December came from Windows 10 devices, which is a clear indication of how well Bing's integration into its latest operating system has turned out for Microsoft.

Sources: Reuters, ZDNet