Microsoft pins hope on Windows 10 to recover from Q42015 loss

USA: Microsoft is reportedly banking on Windows 10 (which releases July 29), to recover from Q42015 loss.

The company has reported a quarterly dip in sales, largely as an impact of a $7.5 billion write-down for its acquisition of Nokia devices and services business and a declining Windows sales.

The reported revenues for the quarter ended June 30, 2015 were $22.2 billion, a decline more than 5% YoY.  The operating loss was $2.1 billion.

Devices revenue

Revenue from devices declined 22% mainly due to slow PC market following the XP end-of-support.

On the positive side, Surface revenue grew 117% , driven by Surface Pro 3 and launch of the Surface 3.  The strong growth in consoles, Xbox Live transactions and first party games brought 27% growth in Xbox revenue as well.

“Our approach to investing in areas where we have differentiation and opportunity is paying off with Surface, Xbox, Bing, Office 365, Azure and Dynamics CRM Online all growing by at least double-digits,” said Satya Nadella, chief executive officer at Microsoft.

The upcoming release of Windows 10 will create new opportunities for Microsoft and our ecosystem, said he. "I do believe that Windows 10 will broaden our economic opportunity and return Windows to growth."

Microsoft plans to generate new growth through its first-party premium device portfolio. It intends to reduce losses on phone as well by operating more effectively and efficiently with a more focused portfolio.

Commercial revenue

Microsoft saw a strong demand for Office 365 and Dynamics products.

Nearly 3 million consumers signed up for Office 365 during the quarter, taking total subscriptions to 15.2 million. On the commercial side, the growth is user ase is 74%.

Dynamics revenue grew 6%, with the Dynamics CRM Online install base growing almost 2.5x.

Commercial cloud revenue grew 88% driven by Office 365, Azure and Dynamics CRM Online and is now on an annualized revenue run rate of over $8 billion.

Microsoft tripled revenue from Azure Premium Services this quarter.

"In cloud alone, our annualized commercial cloud run rate surpassed $8 billion this quarter. We’re on a strong trajectory toward our goal of $20 billion in fiscal year 18," said Nadella.

Server products and services revenue grew 4%, with stable annuity performance offsetting declines in transactional revenue.

Office commercial products and services revenue, however, declined 4%, with continued transition to Office 365 and lower transactional revenue due to declining business PCs following the XP end-of-support. Windows volume licensing revenue declined 8% as well.

Microsoft however sees a market opportunity of more than $45 billion in areas such as security, BI and analytics.