Microsoft’s fiscal year 2016 Q2 earnings aren’t looking so hot unless you know where to look: right at Surface. Windows OEM Pro revenue growth is down 6% year-over-year, one percentage point better than the first quarter, but still down compared to one year ago this quarter. Windows OEM non-Pro revenue growth is down 3% year-over year, while Windows volume licensing revenue growth is down 4% year-over-year. Search Advertising Revenue, Xbox Live active users, and Surface revenue are all on the rise.
Imagine your surprise when you find that while sales of the iPad and the Mac are going down, Microsoft’s Surface tablet is going up. Of course the two shouldn’t be compared directly due to the massive amount of distance between sales of Apple’s products and Microsofts, but it’s fun to think about in the most basic of terms.
Microsoft reports this quarter that Surface revenue is up to $1.35 billion USD. That’s up from $672 million in Surface revenue the quarter before, and up from $1.1 billion year-over-year.
While Microsoft’s phone revenue is down 49% year-over-year, Microsoft’s Surface revenue is up 29%. It’s almost as if Microsoft’s Surface tablets are selling well!
The phone revenue is said to have been expected, according to Microsoft, as it is “reflecting [their] strategy change announced in July 2015.” That strategy wrote off Nokia to the tune of $7.6bn and cut 7,800 jobs in the process. Have a peek at this column to understand this strategy better: Did Nadella just put the nail in Windows Phone’s coffin?
Meanwhile the Surface revenue increase by 29% is, what Microsoft says, “driven by the launch of Surface Pro 4 and Surface Book.”
Another high point here is the Xbox Live monthly active users number at a record 48-million. That’s a growth of 30% year-over-year and certainly something the gaming crew at Microsoft can be proud of.