- Office revenue was up 5%, with Office 365 up 70%
- Office 365 subscribers now up to 20.6 million
- Azure revenue grew 140%
- Over one third of the Fortune 500 now use Microsoft Enterprise Mobility solutions, up nearly 3x year-over-year
Some more details from the press release:
More Personal Computing revenue decreased $622 million or 5%, mainly due to lower revenue from Devices and Windows, offset in part by higher revenue from Gaming and search advertising. More Personal Computing revenue included an unfavorable foreign currency impact of approximately 3%.
• Devices revenue decreased $896 million or 26%, mainly due to lower phone revenue, driven by a shift in strategy for the phone business, offset in part by higher Surface revenue. Phone revenue decreased $1.2 billion or 53%, as we sold 4.5 million Lumia phones and 22.5 million other phones in the second quarter of fiscal year 2016, compared with 10.5 million and 39.7 million sold, respectively, in the prior year. Surface revenue increased $248 million or 22%, primarily driven by the release of Surface Book and Surface Pro 4 in the second quarter of fiscal year 2016, offset in part by a decline in revenue from Surface Pro 3.
• Windows revenue decreased $426 million or 8%, mainly due to lower revenue from patent licensing and Windows OEM. Patent licensing revenue decreased $161 million, due to a decline in units and patent revenue per license. Windows OEM revenue decreased $138 million or 5%, driven by declines in the business and consumer PC markets. Windows OEM Pro revenue declined 6%, driven by a decline in the business PC market. Windows OEM non-Pro revenue declined 3%, outperforming the consumer PC market, driven by a higher mix of premium licenses sold.
• Search advertising revenue, excluding traffic acquisition costs, increased $109 million or 17%, primarily driven by growth in Bing, due to higher revenue per search and higher search volume.
More Personal Computing operating income increased $532 million or 35%, primarily due to lower operating expenses.
• Operating expenses decreased $561 million or 14%, mainly due to lower sales and marketing expenses and research and development expenses. Sales and marketing expenses decreased $359 million or 18%, driven by a reduction in phone expenses, partially offset by marketing expenses associated with the launch of Surface Pro 4, Surface Book, and Windows 10. Research and development expenses decreased $179 million or 11%, mainly due to a reduction in phone expenses.
Microsoft has been a company in transition for years, ever since it discovered the Internet(!), and Windows Phone/Windows 10 Mobile is also mid-transition, from the smart budget choice at the low end to a showpiece for how far Windows 10 can extend at the high end (of mobile). I doubt 'Lumia' sales will be any higher in Microsoft's Q3 either - the 950 and 950 XL will sell in steady numbers once the prices come down further, but not in the same 'mass market' quantities as typical Android or iPhone.
But, again, Microsoft's intentions have changed. They now just want to demonstrate that Windows 10 is the OS that extends from the largest desktop down to the smallest mobile (e.g. Lumia 550), with the Lumia 950 range, mini tablets and Surface Pros all just interesting product points along the way.