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Microsoft banks $20B in revenue, Surface pulling in $500M quarterly

Microsoft’s quarterly reported ending on March 31, 2014 has just been released. The Redmond-based company reports revenue up by 8% to $20.40 billion for FY14 Q3 and $7 billion in profits. Revenue for the Devices & Consumer divison grew 12% to $8.3 billion, while Commercial revenue was up 7% to 12.23 billion. Full breakdown and stats below. Spoiler alert: The Surface business is doing pretty well.

Both the consumer and enterprise business of Microsoft were up this past quarter. Devices and Consumer is up 12% to $8.3 billion.

  • Windows OEM revenue up 4%, while Windows OEM Pro revenue up 19%
  • Office 365 now accounts for 4.4 million subscribers, adding close to 1 million during the quarter
  • 1.2 million Xbox One consoles sold and 0.7 million Xbox 360 consoles sold
  • Surface revenue up 50% and is close to $500 million
  • Bing search share in the U.S. is up 18.6% with advertising revenue up 38%
  • Azure revenue is up over 150%
  • Windows volume licensing grew by 11%
  • Office 365 revenue is up by over 100%

Here’s Microsoft CEO Satya Nadella on the past quarters performance:

“This quarter’s results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world. We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth. We are focused on executing rapidly and delivering bold, innovative products that people love to use.”

Get the full numbers at the source link down below. Microsoft has an earnings call scheduled for 2:30 p.m. PDT. We’ll be listening in to see if we can learn anything else new. We're happy to see the Surface doing well. In the previous quarter they 'doubled revenue', but now we have some firmer numbers. 

Source: Microsoft

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Microsoft banks $20B in revenue, Surface pulling in $500M quarterly

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Since the Surface RT is still widely available for sale, it's also part of those numbers. Actually, I wouldn't be surprised if the original Surface RT was the responsible for the increase in sales since you can now get it for just 199€.

You trool. They said it due to second generation surface and pro models. And you are not a troll now, but you are troll evey single time.

Posted via the WPC App for Android!

If the numbers were made up of a lot of RTs then that would make the figure even better. We only have a revenue figure and they would have to ship 5 times the volume of RTs compared with a top spec Pro 2.

I think that would include everything. They are using the Surface RT for promotional and educational giveaways.

Actually, since they wrote down the inventory last year, when they sell the RT unit, it would be mostly profit. The cost basis of those units would be really low. I predicted that they would recover a good chunk of that writeoff. It is only a true loss when the inventory is scrapped. They still lost money because that inventory is being sold at cost or below cost, but it wasn't as big as that writeoff made it seem.

Probably, we're assuming 'Surface revenue' means anything Surface related. The tablets themselves + accessories.

It's no different from now Apple lumps in all the different iPads into one when they give out their numbers.  In this case it's whatever Surface devices they still have on sale, and I think they still have some Surface RTs in stock.

That's good news. I think they overreached with the first Surface' expectations. They have a proper handle on it now

Wait...if the others are the haters, what is a person that instead of "Microsoft" or "MSFT" or "MSoft", replaces the S with a dollar sign?

I think that's what he was trying to say... He probably was being sarcastic with the $$$$..
....................
Anyways... Why aren't they reporting on WP revenue???

Yes i was being sarcastic with my comment. And i did that because of regardless of all the bashing ppl do towards them, M$ always make money!! Maybe not the way you want them to but they do.

Well, they don't sale the phones, yet. So WP will probably start showing up next quarter, but heavier in the one after that. This is the last quarter without it though.

Don't worry, it will happen on Black Friday most likely. By that time Microsoft should be presenting the Surface 3 and so they'll definitely try to put out all the stock Surface RT devices they still have.

I'm sure you can find a good deal for a refurb one via ebay. I also get a lot of email adverts from Bestbuy, offering the first RT with cover at the ball park range of $300. I think that would be the best option other than waiting for a fire sale that looks less amd less to be happening with improving financial numbers for Surface.

His version of 'developers, developers, developers!' I guess. Nice to see a leader with a strong, defined and determined vision. It's what the naysayers need to hear to convince them that this is a new Microsoft.

Wait a minute wait a minute..... Wasn't surface revenue like $1 billion last quarter? How did it go up? Wouldn't this be going down?

These things are generally compared year-over-year rather than quarter-to-quarter to eliminate seasonal influences (e.g. xmas).

Numbers like this are given year-over-year because of fluctuations in the annual cycle. People do more shopping before Christmas than after.

Ok, where's the article you read? I want to read it too. However, the article here DID mention the Surface. Windows Phone though, isn't on here because they aren't selling their own hardware, yet. That will start either in the next quarter, or the one after that.
Still can I get a link to the article you read? Thanks!

Good. Kick some Samsung/Apple ass and make WP even better for if you buy my good old Nokia than you'd better keep the Nokia soul alive!!! Today mocked in Holland but tomorrow praised in the world once again.

Sure they did. Microsoft enterprise/business services and software revenue far surpassed Apple enterprise/business services and software. Microsoft gaming console revenue was also way ahead of Apple :)

I am not sure if the surface numbers are a big success. And i doubt that the new Microsoft boss is a big surface fan because he always talks about MS being a software-company.

They are without a doubt but he is talking about mobile software not hardware. But hey I might be wrong and he loves surface. I wish he does. Honestly.

Not necessarily. Mobile software is part of it, but not all of it. So far he has also been very positive towards the Windows Phone and Surface products. Also he frequently peonies the Xbox brand because of its use of cloud services. Mobile first, cloud first doesn't only refer to providing these services but also to creating products that use them heavily.

Excellent quarter, and interesting to see such growth. I'm surprised, and pleased, to see surface growing also - not sure what the breakdowns are but I know the surface devices can be had for a good deal. Good job MS

The increase of Surface sales is certainly related to the drastic price drops they've suffered. You can get a Surface RT for 199€ and the 64GB version for 299€. Those are much better values for what it is and so people tend to get it.

 

However, as always, we never get a full sheet to see how much do the Surface cost them. $500 million is good only if they're not losing $1 billion in the production and lack of sales. I would just like to see a comprehensive chart.

 

Also good to see them admiting that "acquisitions, joint ventures, and strategic alliances, including our acquisition of the Nokia Devices and Services business, may have an adverse effect on our business".

Now you'll have to play with the dice others have cast. We'll see how will other OEMs like you producing mobile hardware too to compete with them.

But hey, Microsoft...when Microsoft Mobile flops and your shareholders demand its liquidation to stop further bleeding, you can always sell it to the Japanese Consortium that bought Vaio from Sony :P

microsoft has all but perated nokias phone divison for the past two years. as soon as nokia tied itself to wp, everyone knew this was coming. MS has proven it can create marketshare with one realy supplier of its phones, now that wp is free, we will see how many oems jump ship from android to wp since wp will run smoother on budget hardware then android currently does. 

  MS has increased sells in every divison they operate in, and them buying nokia and creating surface shows they arent afraid to follow on the footsteps of once archrival apple. 

You're starting with the wrongest of assumptions: that it was Microsoft that drove sales of the Windows Phone platform. It wasn't. Microsoft did absolutely nothing for it. Nokia did all the work and without the power of the Nokia brand, WP would be dead in the water long ago. To deny that is to just be deluded.

 

As for other OEMs to join WP, we will have to see. But WP licensing wasn't the biggest problem for adoption of the platform. And while the removal of those licensing fees may help, the introduction of Microsoft-OEM will have the opposite effect. Android OEMs weren't that keen on Google owning Motorola either. One of them - Samsung - liked the idea so much that they basically forced Google's hand and Google end up selling Motorola.

What do you think will happen with WP, where the only "real" WP OEM is leaving the market and Microsoft is going to start producing phones themselves? Do you think OEMs like Samsung or HTC will even bother trying to expand WP? OEMs don't like to compete against the manufacturers of their OSs because they are at a clear disadvantage.

 

Also, worst mistake they can do: try to follow Apple's footsteps. Microsoft is NOT Apple. They don't have neither the brand power, nor the hardware tradition and even less, they don't have the consumer loyalty. Buying Nokia's D&S division will not bring Microsoft a single loyalty-consumer. Those who do that with Microsoft are already there. Microsoft doesn't have a Steve Jobs. Even if Nadella tries to emulate him.

Microsoft will be better off following Google than Apple.

 

I think "Nokia did all of the work" is a little extreme, don't you think? What about the hundreds of millions that they gave Nokia? What about the massive update we just got? What about the massive amounts of marketing that they've done at prime times that have gathered more views than Nokia's marketing ( I'm comparing the Wedding and School Play commercials compared to say.... Sensei tak fo toe)? What about them paying developers to make top apps? None of those count? I'm pretty sure sales of WP would be way worse if Microsoft did none of that.

While I'm not sure how well their plan will work, it sounds like they just want to build their own phones (since they can take the blow if they're not selling) and do whatever they can to get WP ~10%, then they can go "ok, OEMs, we'll back off. Here's a large number of people on this OS for you to sell to".

Not really. They may not have done 100% of the work, obviously, but they did 90% of it. Also, they paid millions to Nokia so that Nokia would produce only WP devices. If you want exclusivity, you pay for it. If Microsoft approached HTC with a similar proposal, HTC would also demand millions (actually, billions) to do it. And if Microsoft paid them, they'd do it.

As for the marketing: you're, again, thinking of the USA as if the World was equal to the USA. None of those ads ever aired outside the US. And yet, Windows Phone does a hell of a lot better worldwide than it does in the US.

As for paying developers to make top apps...I'm not really sure they paid that much, otherwise they wouldn't have taken so long to bring stuff like Instagram on board. And if they were really willing to pay that much, we would have Google apps on WP for sure. Also, Nokia is the one that normally reaches out to help developers. They do it more than Microsoft ever did.

 

I get what Microsoft is trying to do here. They're trying to do what Apple does. I don't judge them for that. And I can even see why they got Nokia's D&S division. If you want to create a division, try to get the people from the best division available in the competition. I don't like that they attacked Nokia, but if I were in charge of Microsoft and was forced to find employees for a mobile division I would certainly go to Nokia before another OEM.

The thing is, Microsoft isn't in Apple's position. They're, at best, in Google's position. And the owning of Motorola didn't help Google at all. Actually, it only brought Google close to lose its major OEM. If Microsoft wants to risk being left alone in the WP market, sure, it's a risk they'll take. But it's a bet that will very very very likely fail.

 

Also, I highly highly doubt Microsoft will manage to get WP to around 10% worldwide. If Nokia didn't do it, Microsoft won't do it either. Again, because the power of the Nokia brand, outside the US, is way way way bigger than Microsoft's.

You have valid points in your opinion. Personally, I think people are getting too hung up on this idea, that MS can't achieve anything more. It's always the underlining opinion even when someone writes about their successes. MS buying Nokia was their smartest move. Comparing Google situation when buying Motorola is not the same. That didn't work out because it was unnecessary. Samsung is leading the pack, buying Motorola added no value to their portfolio. Nokia on the other hand was Microsoft's key player in the WP field. Arguably, the only one. Buying them to me is the best bet for any sustainability in this mobile space. Who else was doing it? HTC? Samsung? Did you see the hardware they were pitching? Where was their innovation? Nokia was single handedly doing it all and was the only WP being directly compared to volume leaders like the iPhone and Samsung Galaxy. It's was their quality. Now in other parts of this world Nokia does hold much more value than MS name does, but I'd assume they know this. What will happen if the name Nokia? I don't know, but even with the name Microsoft on the back it'll still do good because they hardware is on par. They can accomplish whatever it is they need to. I feel the more Apple like approach is better than Google. I wish for then to make an entire product line up. More than just the Surface. OEM partners now aren't pushing forth anything truly innovative. Are they to just sit on their laurels and wait? See what HP comes with? Wait to see HTC just paste WP on a new HTC M8? Samsung to rehash old hardware from a Galaxy S4 and call it their new Windows Phone? For Dell to only slightly push ahead with a Venue tablet? Everything hardware wise that received the most praise was from two companies, Nokia and Microsoft. Their now one company, I can only hope their future is now much brighter. If the past has anything to play into the future, everyone one roof is going to bring forth even greater ideas.

First of all Nokia couldn't do squat without Microsoft, Nokia would already have been dead or in the same boat as HTC, LG or Sony. Even Google cannot compete against Samsung with it's second rate Nexus phones. Nokia even acknowlegded that Microsoft was the right choice and not Android. Microsoft built and supplied the OS, the upgrades, produced the developers kits, paid Nokia billions to produce the phones and keep Nokia alive and even paid Nokia marketing budgets to market the smartphones. You cannot sell any phone if the OS is not up to quality standars. The least Nokia can do is thus sell the smartphones (they already had the sale and distribution channel). Nokia's own OS (Symbian) was dead remember, and they did not have the expertise to build a new OS. Brandpower?? Microsoft has no brand power?? Then how do you explain their dominance in the PC market, the Server market, the Cloud market, the game console market and not so very long ago in the mobile market. How do you explain that Windows phone is growing just as fast as the Iphone (surely on a worldwide basis). You have got to be kidding me. Microsoft has so much brand power that almost all OEM's are selling their products, 90% of businesses and 99% of consumers own one or more of their products. Google has no brand power when it comes to selling ti's own hardware devices (Chromebooks, Nexus etc), these are all form a commercial and profitbasis flops. Microsoft is reaping all profits from Android and Chrome, not Google. Furthermore OEM's will not have any choice but to go with Windows phone since producing and selling Android phones alone is not profitable (enough) to them. All Android vendors (Sony, LG, Motorola etc, except for Samsung) are writing big losses on Android. Diversification will be key for them to survive in the smartphone business. Making the licenses free will give them the opportunity to make cheap windows phone, to flood the market with windows phones and to compete effectively with other OEM's and thus to expand their profitablity. There is now a level playing field when we compare the Windows OS with Android now, and that;'s the key for manufacturers. Nokia Here technology etc will be available to all OEM's selling windows phones. The other option for Anddroid OEM's is going bust selling only Android smartphones. With Windows OS integration across devices (tablets, Xbox, PC, carinfotainment and soon TV's etc) and software (OS's, Cloud, business software like CRM,  business applications etc) in the enterprise market and consumer market, Windows smartphones have a real good chance of being succesfull against Android than any other smartphone. In the business world it's Microsoft that rules, not Apple, not Google and that advantage is spurring sales of windows phones.  The world is changing and Microsoft is changing for the better. You seem to forget that Apple has been eclipsed by Samsung as the most succesfull smarphone vendor in the world when it comes to profitability and markete share. So loyal fans or not, the Iphone is losing ground and market share, even to windows phones in certain markets. So these measures of Microsoft will only worsen the competitive landscape for Apple and Google.    

Well said. I wonder how the situation will be now if Samsung made a low cost Windows phone to compete with 520.

200$ for a surface RT ? I did a quik search online and the cheapest one I found was 289$ and in Europe its even more, averaging at 450€ (about 620$!?!)

-PS 32gb variant I searched on.

I picked up one for $199 on a black friday sale last December from a big box chain store that ryhmes with Rest Fry. 

The deals are there to be had, just keep an eye out for them

 

Their not admitting anything. That is a standard disclosure that all financial statements have. Auditors have to disclose anything that might effect their performance, both internal and external. You will often see disclosures about currency fluctuations, market risk, possibilities of laws changing, etc. 

+Globalization

While I'm a US customer, I agree full heartedly. I feel great sympathy for all of my international Microsoft brethren who don't get all of the same great services, features, conveniences and perks I do. Microsoft is a global company, they need to start acting like it.

Current cash = $89 billion. After Nokia deal closes about $82 billion. That's a company on death's door if you read Apple Insider, Cult of Mac, Engadget, Tech News Today and other assorted Apple/Linux fans.

Last i checked, APPLE has $100 billion in cash!!  Maybe $130 billion after there reports. Not far off from M$. So how is death anywhere near them?? M$ doesn't have to lead the pack or industry in cash on hand. But best believe they are one of the few companys with that much $$$ on hand.

If i'm not mistaken, Microsoft bailed Apple out like 15years ago. Apple was getting ready to go under, so if you have a mac or IPhone, thank microsoft. If they hadnt bailed them out, you wouldnt, couldnt, and never had that paperweight(IPHONE)

Yes, they did. And it was Microsoft that forced the return of Steve Jobs. So, in a certain way, Microsoft was the one that dig Windows Mobile and Windows Phone's own grave by allowing and financing the iPhone...=P

That's what smoledman was referring too: How most Apple-Centric blogs and websites are heralding the death of Microsoft. It's ridiculous, and that's the point smoledman is trying to make, how absolutely absurd it is.

In fairness, Apple receives this kind of talk all the time. It annoys me to no end how Apple continuously manages to be one of, if not the most, profitable companies in the world, with very strong growth, yet they're doomed to bankruptcy without Jobs, or their fate is sealed unless the iPhone 6 makes the buyers immortal. It's all absurd, and I'm getting sick of it on all fronts.

No one is dooming them to bankruptcy. What most are dooming them to is stagnation. They are predicting they will become like Microsoft. Get lots of cash each year, but won't grow much anymore. Their valuation is based on their historically large growth rate. If the growth slows to 5%-8% a year, the stock will drop.

Actually Apple is buying back stock and and paying larger dividends. Their cash should start going down a bit. However, they also took out low interest loans to finance some of that.

It's common to use loans for stock buy backs.  It's cheaper for these massive corporations to pay the interest on the loans, than the taxes and other fees they'd have to pay for bringing all that capital back into the United States.  Most of those billions are hidden away in foreign tax havens.

Does this include the Android licensing revenue? I'm thinking how much money Microsoft is making off Android OEM.

Why? Office 365 isn't that great of a deal for the average consumer. Why pay 99€ a year when you can buy the normal full version of Office for 120€ and use it for the next 10 years?

Ref: DJCBS, "Why? Office isn't that great a deal for the average customer.". (Wow, it's hard to respond to only one of your statements.)
What are you talking about? In what context? Home, Education, Small Business P1, or one of the Office365 plans for medium or larger businesses? Are you taking into account all the features of each of theOffice365 plans or maybe just the "Office Software"?
I know, it's alot to know and take into account, but you are focused on a specific amount of dollars. I am wondering about the "actual" value received for money spent.
Best Wishes, No Worries..

Yep, well I'm not buying one until all the promoted services are available in Australia. They can't even pull that off and we're very closely aligned with the US. It seems the worlds oceans slow them down.

Probably in the 6 or 7 figures.  A very small part of the company revenue pie.  The online store for a mobile device or console is a very visible part of the company, but peanuts compared to where the real money is made.

Ref: DJCBS, "Why? Office isn't that great a deal for the average customer.". (Wow, it's hard to respond to only one of your statements.)
What are you talking about? In what context? Home, Education, Small Business P1, or one of the Office365 plans for medium or larger businesses? Are you taking into account all the features of each?
Best Wishes, No Worries..

I'm glad people finally see that the Surface devices are what they are: Amazing devices. Took a while, for people to figure out, but now it's doing better and better. Good job Microsoft!

"Microsoft will die next quarter! You'll see! These billions of dollars mean nothing!" I really despise Bias sites that are so pressed to see Microsoft fail. Bye, ain't happening no time soon. Now the surface division is improving.