Microsoft talked up its cloud business in its first-quarter FY 2016 results, but the news from its phone business was less pretty.

The quarter ended 30 September was the first with a new reporting structure that reduces segments from six to three.

Revenue from its new cloud unit grew by 8 per cent to $5.9 billion, with Microsoft highlighting a doubling of revenue from its Azure cloud business over the past year. Enterprise Mobility customers more than doubled year-on-year to pass 20,000, with the installed base growing nearly six times over the same period.

However, revenue from its More Personal Computing unit, which includes mobile phones, declined 17 per cent to $9.4 billion. Phone revenue actually declined by 54 per cent, expressed in constant currency. On the company’s call with analysts CFO Amy Hood added that phone revenue fell by $1.5 billion in the quarter.

In addition to handsets, the device’s portfolio includes Surface tablets. “As expected, Surface revenue slowed with the market anticipation of a new Surface Pro device for the holidays,” she said.

Within the same unit, Windows OEM revenue declined by six per cent which, the company noted, was better than the overall market, stating that the arrival of Windows 10 “spurred PC ecosystem innovation and helped drive hardware mix toward premium devices”.

On the analyst call, CEO Satya Nadella repeated a figure from earlier this month that there are now more than 110 million active devices running Windows 10, a figure no doubt boosted by free upgrades. He added: “We are well on our way to reaching one billion Windows 10 active devices.”

Worldwide search advertising revenue grew by 29 per cent, with market share benefiting from from Window 10 usage. Xbox Live monthly active users grew 28 per cent to 39 million.

Revenue in the Productivity and Business Processes unit declined by 3 per cent to $6.3 billion. Office 365, the cloud version of its productivity software, saw a revenue jump of nearly 70 per cent.

Group results
On a group level, Microsoft’s quarterly net income grew by 2 per cent to $4.62 billion, although revenue fell by 12 per cent to $20.38 billion.

In July, Microsoft announced plans to slash 7,800 jobs, mainly in its phone business,  as well as taking an impairment charge of $7.6 billion relating to acquisition of the business from Nokia. And a further 1,000 jobs, about 1 per cent of its global workforce, are set to follow, it has confirmed.

The company has moved from having a standalone phone business to a more integrated approach around Windows-based devices.