Surface Success For Microsoft Amid Xbox Pain

Microsoft saw demand for its Surface tablets surge in the last quarter, confounding the ailing PC market with stronger than expected performance, though signs point to Xbox struggling. The company credits the Surface Pro 3 for its tablet successes, with revenues of $713m in the three month period, an increase of 44-percent. However, the outlook wasn't so great for gaming hardware.

The bean-counters haven't said how many Xbox One consoles were sold, and Microsoft only flags Xbox Live usage as a highlight. That grew by more than 30-percent, the company says, as users increased in number.

However, Xbox platform revenue as a whole is down 24-percent compared to the same period a year ago.

Meanwhile there's good news and bad in Windows Phone. Handset launches have hovered around the entry- to mid-level since Microsoft took control of Nokia's Lumia business, and that's had a knock-on effect with revenue, which amounted to $1.4 billion, a drop of 16-percent.

Microsoft sold 8.6 million Lumia phones in the period, and claims that's 18-percent more than the previous year. All mobile-centric eyes will be on whether revenue is healthier when Microsoft launches its first flagship Windows 10 handsets.

As for software, Office 365 has been growing in users – now up to 12.4 million, in fact – but they're not contributing as much to the bottom line. Office consumer revenues dropped 41-percent in the period.

With Build 2015, Microsoft's annual developer event, taking place in San Francisco next week, it remains to be seen how the company will continue to leverage its cloud strengths.

"Next week at Build we're excited to share more about how we're empowering every individual and organization on the planet to achieve more with the next generation of our platforms," Microsoft CEO Satya Nadella said today.

SOURCE Microsoft