Microsoft's CEO Satya Nadella may have defied the odds and prove to Wall Street that they can generate substantial profit and revenue in its third quarter of fiscal year 2015, but that's no thanks to the good old PC.
The good news for Microsoft is that its enterprise cloud has a projected run rate of Us$ 6.3 billion this year. That's up from Us$ 5.5 billion just three months ago. Aside from that, nothing is worth looking forward to.
Business Insider reported that Microsoft's old traditional business — licensing software like Windows and Office for use on new PCs — is shrinking like crazy, amid a tougher market for PCs in general.
Overall, Microsoft's Devices and Consumer Licensing business, the catch-all unit responsible for Microsoft Windows on new PCs, consumer versions of Microsoft Office, and Windows Phone on phones from other manufacturers, was down 24% from last year, a dip of about $1.1 billion.
Microsoft Windows licensing revenue for businesses fell 19%, and fell 26 percent for consumers, for an overall 22 percent dip in revenue. Microsoft blames this on the generally weak PC market, hard comparables with last year (when a deadline for the end of Windows XP support drove a lot of PC upgrades), and a general trend towards cheaper devices.
Meanwhile, Microsoft Office consumer revenue was down 41 percent, and Microsoft Office commercial revenue was down 16 percent. (Note that business versions of Office roll up into a different financial segment, Commercial Licensing.)
Microsoft cites this as a side-effect of huge growth in Microsoft Office 365, which has a subscription-based model. It also blamed slow PC sales — the fewer PCs sold, the fewer people and companies buy Office for them.
Also, Microsoft Office is pre-installed on a lot of new PCs in Japan, and the weak PC market there cuts into that business, Microsoft says.
All of which adds up to a strange conclusion: The businesses and technologies that made Microsoft so successful in the first place are slowly fading in favor of the cloud.
That's going to cause some short-term pain, but at least Microsoft has prepared for the shift, and its cloud growth is a nice bright spot. Plus, it's always possible that Windows 10, expected out at the end of July, will drive growth in the PC market again, as Windows 8 failed to do.
The good news for Microsoft is that its enterprise cloud has a projected run rate of Us$ 6.3 billion this year. That's up from Us$ 5.5 billion just three months ago. Aside from that, nothing is worth looking forward to.
Business Insider reported that Microsoft's old traditional business — licensing software like Windows and Office for use on new PCs — is shrinking like crazy, amid a tougher market for PCs in general.
Overall, Microsoft's Devices and Consumer Licensing business, the catch-all unit responsible for Microsoft Windows on new PCs, consumer versions of Microsoft Office, and Windows Phone on phones from other manufacturers, was down 24% from last year, a dip of about $1.1 billion.
Microsoft Windows licensing revenue for businesses fell 19%, and fell 26 percent for consumers, for an overall 22 percent dip in revenue. Microsoft blames this on the generally weak PC market, hard comparables with last year (when a deadline for the end of Windows XP support drove a lot of PC upgrades), and a general trend towards cheaper devices.
Meanwhile, Microsoft Office consumer revenue was down 41 percent, and Microsoft Office commercial revenue was down 16 percent. (Note that business versions of Office roll up into a different financial segment, Commercial Licensing.)
Microsoft cites this as a side-effect of huge growth in Microsoft Office 365, which has a subscription-based model. It also blamed slow PC sales — the fewer PCs sold, the fewer people and companies buy Office for them.
Also, Microsoft Office is pre-installed on a lot of new PCs in Japan, and the weak PC market there cuts into that business, Microsoft says.
All of which adds up to a strange conclusion: The businesses and technologies that made Microsoft so successful in the first place are slowly fading in favor of the cloud.
That's going to cause some short-term pain, but at least Microsoft has prepared for the shift, and its cloud growth is a nice bright spot. Plus, it's always possible that Windows 10, expected out at the end of July, will drive growth in the PC market again, as Windows 8 failed to do.
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