Lumia sales down in the pre-flagship doldrums, but Microsoft results otherwise positive

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Microsoft's Q3 2015 earnings (yes, yes, it's Q1 for it, due to a strange calendaring system) are out and things are up across the board, thanks to Nadella's plans working out well so far. Lumia sales were down QoQ, of course, this is the big doldrum period before the new Windows 10 Mobile handsets (and principally the flagships) appear and indeed sales from now on should be seen in the light of a revised focus for what Windows 10 Mobile is.

WindowsCentral had this handy summary:

Today's FY15 Q1 financial report from Microsoft, believe it or not, contains a lot of positive news. In fact, Microsoft stock is trading higher in after-hours trading pushing it to the $48 mark for the first time in a long time. Investors are happy over Microsoft's future.

The reason for the Wall Street exuberance is many of Microsoft's businesses are doing well, to wit:

  • Bing is up 29%
  • Office 365 commercial seats up 66%
  • Consumer licenses up 157%
  • Total commercial bookings up 10%
  • Servers up 9%
  • Azure up 135%

Those almost all fall under the new "Intelligent Cloud" grouping with an overall 8 percent growth for $5.9 billion in revenue. An analyst at FBR Capital Markets, Daniel Ives, is quoted by the New York Times as saying that "…the company "hit it out of the park" with its profits. "Cloud is the epicenter of the growth story".

The bad news, although hardly surprising is the Lumia line of Windows Phones. Microsoft got pulverized with a 54% decline in phone revenue compared to the same quarter last year. That translates into just 5.8 million Lumias sold last quarter versus 9.3 million the year earlier.

If you cast your mind back a few months though, you'll remember the huge refocus announced by Satya Nadella, with impact on the mobile side being a massive reduction in the strategy of 'sell 'em cheap and hope' and a renewed focus on the high end and unique selling points. Specifically, the Lumia 950 and 950 XL and Continuum.

The time triggers for this new strategy are based around Windows 10 Mobile, of course, which is nearing completion (for new installs, at least, if not OTA upgrades), and the physical availability of the Lumia 950 and 950 XL at the end of November, so just over a month away. Q4's results are therefore also going to be poor for Lumia if you look at raw numbers, though Q1 should see an uptick and, hopefully, a much higher 'margin' for each smartphone sold. 

Source / Credit: Microsoft