Stronger than expected Windows sales contribute to Microsoft's solid Q2 FY20

While Microsoft and Wall Street only want to talk about the company's cloud sales and margins, Windows was no slouch when it came to Microsoft's Q2 FY20 results. Microsoft's "More Personal Computing" business segment -- which includes Windows, Surface, Bing/advertising gaming and Microsoft 365 -- contributing $13.2 billion of the company's $36.9 billion for the quarter.
Commercial cloud, the Microsoft-devised bucket which includes Office 365, Azure, Dynamics 365 and some LinkedIn revenues, contributed $12.5 billion in the second quarter. With gross margins of 67 percent for the quarter, this is the category on which Microsoft wants everyone to focus.
Windows' growth this quarter was above officials' expectations. Windows Pro OEM revenue growth was 27 percent compared to the comparable year-ago quarter. Non-Pro (consumer) revenue growth was four percent, the first time it had been in the black for the past year. And Surface revenue was $1.98 billion for the quarter.
Officials attributed Windows' strong results to a few things: Resolution of an Intel chip-supply issue which plagued the company in Q2 FY19 (and beyond), as well as strong demand for Windows 10, given anticipation of Windows 7's end of free support, which happened in January this year. An unnamed OEM partner also pre-purchased Windows 10 licenses in anticipation of trade/tariff issues likewise contributed to the strong non-OEM growth.
Given Q2 FY20 revenues covered the period between October 2019 and December 2019 -- and Windows 7 support didn't end until January, 2020 -- there still could be more positive impact on Windows revenues during Microsoft's Q3 FY20. In addition, revenues Microsoft will be earning from selling companies Extended Security Updates (ESUs) for Windows 7 haven't yet really started contributing to revenues, a company representative told me, even though Microsoft began offering ESU coverage as of April 1, 2019.
During the analyst call following the release of Q2 results, Chief Financial Officer Amy Hood said that OEM Pro revenues contribute 40 percent of overall Windows revnues. OEM Non-Pro revenues add another 20 percent and Windows Commercial products and cloud services an additional 30 percent. (Commercial Products and Cloud Services is where Microsoft 365 revenues, among other products/services, fall.)
In Q2, an increase in Microsoft 365 agreements, "which carry higher in-quarter revenue recognition," played into More Personal Computing's solid performance. Making the business unit's numbers even more impressive was the fact that gaming revenue -- also counted in this segment -- was down 21 percent compared to the comparable quarter. Xbox content and services revenue was down 11 percent in Q2 because of a high prior year comparable influenced by a "third-party title," which many believe to be Fortnite.
Hood warned that the More Personal Computing segment could face a tougher Q3 FY20. She attributed this to uncertainties around public health in China (where Microsoft makes its hardware), as well as unspecified "execution challenges" in the consumer segment for Surface.
Hood and CEO Nadella emphasized that Microsoft's Azure business is seeing more impact from higher-margin platform-as-a-service type offerings, a trend which should continue and grow in the coming months. New PaaS workloads like Azure Synapse Analytics, Cosmos DB and Azure Arc are coming on board, and Microsoft 365 is becoming a big contributor to Microsoft's cloud business, she said. Microsoft's xCloud game-streaming service also is hosted on Azure.
Microsoft still does not break out Azure sales separately, but some analysts have estimated that Azure is contributing roughly $4 billion in revenues per quarter.
source zdnet
Industry: Cloud Computing

Latest Jobs
-
- Outside IR 35 contract- Threat & vulnerability analyst - SC CLEARED UK REMOTE
- N/A
- £550
-
6 month rolling contract Outside IR35- immediate start. Threat and Vulnerability Analyst. Tenable.sc experience needed. The ability to deploy agent, configure environments, run active and passive scans, produce reports and prioritise remediation activities based on output Current and ACTIVE clearance is required
-
- Chief Information Security Officer- CISO. London
- London
- N/A
-
Chief Information Security Officer (CISO) is needed to join a senior leadership team that is driving change across a London based FTSE business. You will have responsibility and accountability to define and execute an information & Cyber Security strategy. To be successful you should have the following experience; Experience defining, presenting and executing against your information AND cyber security strategy. Experience delivering / managing functions across information security GRC / Audit and technical Cyber Security capabilities. Senior stakeholder management to the executive committee. Embedding Info / cyber security within a Cloud focused environment. Further develop, expand and mature the information / cyber security function | team. Be able to regularly commute to London Financial services experience is desirable. If this sounds like an opportunity you are interested in then please use the below form to schedule a call. This is an exclusive project to DCL Search. All conversations are kept in confidence.
-
- IAM Business Analyst- ForgeRock
- European Union
- £500 per day
-
IAM Business Analyst with ForgeRock experience is need for a 12 months contract The client is in the middle of a large scale ForgeRock deployment and the BA will sit between the technical teams and the business helping to ensure the project is a success You will need to be a strong business communicator and have experience of mapping business needs against ForgeRock features This will be a remote project dealing with teams in different geographies, you must have strong English communications skills and be happy working remotely and able to be proactive to ensure your side of the project is a success
-
- Java Developer
- United Kingdom
- upto £55,000 plus good benefits
-
Home based opportunity for an experinced Java Developer to become involved in a number of large scale national IAM projects Duties include · Development and maintenance of source code for our customers IAM deployments · Have a good understanding of testing frameworks and methodologies and are able to test solutions within you own work and others · Ability to create clean code according to good coding standards · Create easy to follow documentation You don' need to have experience within the Identity Access Management space but it would be beneficial we are looking for people with · Java experienced ideally Java 11 · preferably experience in some of the following: Maven, Gradle, PHP, Lua scripting, C#, Spring Boot/Spring, OGNL, or Groovy · experience of working with one or more of: creating/consuming REST APIs LDAP SQL encryption Identity Protocols (SAML, OAuth, OIDC, SCIM etc) · good knowledge of development methodologies with regards to the end user experience For more details please send your CV and we will come back to you