Microsoft talked up the strength of its cloud business in its Q2 results, while placing a lot less focus on the ongoing decline of its smartphone activities.
Revenue in the company’s More Personal Computing unit, which includes the company’s devices activities as well as Windows OEM licensing and Xbox, fell 5 per cent to $12.7 billion.
As anticipated, the company’s Phone revenue plummeted by 53 per cent (49 per cent at constant currency), a decline of $1.2 billion, following a change in strategy announced in July 2015.
The company sold just 4.5 million Lumia smartphones (down from 10.5 million year-on-year) and 22.5 million other phones (down from 39.7 million).
The figures come shortly after the company introduced its first smartphones powered by the latest Windows 10 Mobile platform, which it has previously said have been well received.
And there are big question marks over the future of the smartphone unit, with some speculation that new Lumia devices will be thin on the ground, as Microsoft looks to transition to a more Surface-like proposition targeting premium and business users.
And, contrastingly, Surface revenue increased by 22 per cent to $1.35 billion (29 per cent in constant currency), following the launch of Surface Pro 4 and Surface Book, with continued channel expansion and growing commercial sales.
Lower Windows revenue was also noted, due to lower revenue from patent licensing and Windows OEM fees, off the back of declines in the business and consumer PC segments.
Revenue in the Productivity and Business Processes unit declined 2 per cent (up 5 per cent in constant currency) to $6.7 billion.
Office commercial products and cloud services revenue increased 5 per cent in constant currency, driven by Office 365 revenue growth of nearly 70 per cent in constant currency, while Office 365 consumer subscriptions increased to 20.6 million.
Revenue in Intelligent Cloud grew 5 per cent (up 11 per cent in constant currency) to $6.3 billion.
Server products and cloud services revenue grew 10 per cent in constant currency. Azure revenue grew 140 per cent in constant currency with revenue from Azure premium services growing nearly three times year-on-year.
On a group level, the company reported a profit of $5 billion, down 14.8 per cent year-on-year, on revenue of $23.8 billion, down 10.1 per cent.