Microsoft boosted by intelligent cloud growth and Surface sales

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Microsoft hits revenues of £17.9bn but still hides its true Azure results, which are bundled in with ‘Intelligent Cloud’ division

Microsoft has reported a five percent growth in its ‘Intelligent Cloud’ division, which includes sales of its Azure public cloud services.

Redmond reported earnings for its cloud in its fiscal second quarter grew to $6.3bn (£4.4bn), with Azure sales growing by 140 percent.

Microsoft’s results come as the cloud services market is expected to hit $27.4 billion (£19bn) in 2016, according to Synergy Research Group.

Satya-Nadella-Microsoft-CEO-600x400But Microsoft’s Azure cloud, which looks to compete with Amazon Web Services and Google’s Cloud Platform, is still hiding behind the company’s stealthy way of reporting financial results.

Amazon made $2.4bn (£1.7bn) from Amazon Web Services in its last quarter, so you’d think Microsoft is blowing Amazon out of the water with its $6.3bn earnings, but Microsoft isn’t actually so transparent when it comes to reporting on its cloud.

Intelligent Cloud’, as Microsoft dubs its division, also covers Windows Server and enterprise software sales, making it difficult to pick out just how much Azure made by itself, making a direct comparison to AWS very difficult.

Overall, Microsoft saw a boost in its Surface tablet sales, helped along by the release of the company’s Surface Pro 4 and Surface Book.

Microsoft posted revenue of $25.69bn (£17.9bn), beating analyst estimates of $25.26bn. The company posted net income of $6.3bn (£4.4bn).

CEO Satya Nadella (pictured) said: “Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas. Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices.”

Microsoft’s revenue in Productivity and Business Processes, which includes Microsoft Office services, fell two percent, with Microsoft Dynamics revenue growing 11 percent in constant currency.

Revenue in the Microsoft PC division fell five percent to $12.7bn, with Windows OEM revenue falling five percent. Windows Phone revenue fell 49 percent. However, Surface revenue increased 29 percent.

It was a strong holiday season for Microsoft highlighted by Surface and Xbox,” said Kevin Turner, chief operating officer at Microsoft. “Our commercial business executed well as our sales teams and partners helped customers realise the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online.”