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11/23/2024 06:11:25 pm

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Microsoft Beats Analyst Expectations With Strong Cloud Performance

Microsoft / Satya Nadella

(Photo : Reuters) Microsoft has surpassed analyst expectations with strong cloud and services performance.

Microsoft has beat analyst expectations for the third fiscal quarter with impressive performance in the cloud market alongside an increase in hardware sales.

Not everything was perfect as Microsoft noted a lack of Windows sales, mostly due to the upcoming Windows 10 launch. Mobile and Xbox were also down in sales and revenue, although Xbox first party title sales were up 83 percent off the back of Minecraft sales.

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Microsoft's cloud business is the key component of this quarter, with double the sales from the previous quarter. Both enterprise and consumer cloud platforms are becoming extremely popular, thanks to Microsoft's low barriers to entry.

This puts Microsoft in a prime spot to compete against IBM, Cisco and Amazon Web Services --- which also noticed an increase in sales hitting US$5 billion in revenue this quarter.

Microsoft's CEO Satya Nadella has been pushing the cloud and services mantra since his arrival in 2014, and it looks to be paying off big time, with consumers and businesses both enjoying the lavish services available on Azure and OneDrive.

The company is still transitioning from the acquisition of Nokia in 2013 for US$7.2 billion, a move that continues to anger investors that want Microsoft to stick to software and services, rather than picking up more hardware.

Surface hardware has started to show real promise; the Surface Pro 3 has shown incredible sales over the past year and the Surface 3 is the first tablet from Microsoft to be offered at a competitive price to the iPad, without all the constraints Windows RT offered --- hopefully this has boosted sales.

One issue for Microsoft is the scale of the company. It dropped the Xbox entertainment division and seems keen on removing almost anything not do with services and the cloud --- despite seeing profit in these other divisions.

We cannot argue that Microsoft's plan seems to be working, but it is going to be a few more quarters before we really see if Nadella's plan actual has promise for the future of the company.

In many ways, Microsoft is in a similar place to Yahoo, in that both have new leaders looking for direct control of a few key areas, and the sale of branches of no use. Yahoo is trying to sell its stake in Yahoo Japan, and is building another holding company for Alibaba's US$40 billion shares.

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