Microsoft posts mixed bag of results as cloud takes shape

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Azure growth offsets poor performance in PC and phone market as Microsoft ups pressure on AWS

Cloud revenue helped Microsoft beat Wall Street’s expectations and close its last fiscal quarter of 2016 with £16 billion in revenues and a £2.4 billion profit.

Revenue from Microsoft Azure grew more than 100 percent year over year, as the company said usage of the platform had doubled.

The results position Microsoft in its best position yet to challenge rival Amazon Web Services (AWS) in the public cloud market.

Challenger

AV Microsoft-HoloLens-1024x683“This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations,” said Satya Nadella, Microsoft CEO.

“The Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.”

Microsoft’s Office 365 services revenue grew 54 percent from business users, and 19 percent from consumers. Microsoft Dynamics products grew 6 percent.

There were strong results in the server department, with server products growing 5 percent, but Microsoft was expectedly challenged in the personal computing space as worldwide PC sales continue to fall. Overall, the Personal Computing division was down 4 percent.

Windows OEM non-Pro revenue grew 27 percent, and Windows OEM Pro revenue grew just 2 percent. Surface revenue increased 9 percent driven by Surface Pro 4 and Surface Book devices.

“This fiscal year we invested in innovation and expanded our market presence in key product areas and geographies,” added Amy Hood, executive vice president and chief financial officer at Microsoft. “I am pleased with the execution from our sales teams and partners this quarter who delivered a strong finish to the fiscal year.”

Windows 10

However it wasn’t all good news with mobile continuing to be the company’s Achilles heel. Windows Phone revenue plummeted 71 percent and last week, Microsoft admitted that it won’t hit its self-imposed deadline of getting Windows 10 onto a billion devices by 2018.

For the full year, Microsoft revenue was $85.3 billion compared to $93.6 billion last year, with operating profits at $20.2 billion, up from $18.2 billion last time.