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With KB5043178 to Release Preview Channel, Microsoft advises Windows 11 users to plug in when the battery is low

Copilot in Outlook will generate personalized themes for you to customize the app

Microsoft will raise the price of its 365 Suite to include AI capabilities

Death Stranding Director’s Cut is now Xbox X|S at a huge discount

Outlook will let users create custom account icons so they can tell their accounts apart easier

Microsoft’s Q3 FY2015 earnings reflect a company transitioning to the cloud

3 min. read

Published onApril 23, 2015

published onApril 23, 2015

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Well, the licensing bubble may have finally burst. Microsoft rode an impressive wave in licensing revenue over the course of a rocky Windows 8 situation. When investors thought, Windows 8 would single-handedly doom Windows, and competition from tablets sales threatened PC makers, licensing revenue from enterprise business upgrading to Windows 7 masked some of those realities. Unfortunately for Microsoft, those days have come to an end.

Windows & Office

According to the company, during its FY15 Q3 earnings report, Windows OEM revenue declined 22%. In particular Windows OEM Pro revenue declined 19% as the final rush of Windows 7 upgrades leveled out to “pre-Windows XP end-of-support levels”. This news is also compounded by the fact that PC makers are struggling even more on the consumer side of things. Licensing for Windows on consumer PC is down 26% due to the many hardships consumer PC manufacturers are facing when trying to sell new hardware. Luckily for Microsoft, consumer licensing of Windows only resulted in 2% actual transactional revenue.

Windows wasn’t the only red mark on their earnings sheet. Consumer licensing for Office also saw a sharp decrease of 41%. However, as Microsoft pivots into becoming a cloud-based software provider, the decrease in wholesale licensing made way for subscription-based purchases. This tactic is becoming increasingly evident, as Microsoft is offering PC manufacturers the ability to bundle the full Office suite on their devices for a year, in hopes of gaining subscriptions later on.

In the last bit of bad news, Windows Phone revenue also saw a decline of 16%. That is amazing considering that Windows Phone was made free for device makers a little under a year ago.

Bing

Now for the growth. Microsoft is still in a transition period, but they are coming around a corner, and hopefully investors can start to see the results. Microsoft’s Online Advertising saw its revenue increase 21% with the increase in traffic to Bing also up 150 basis points YoY. Possibly why the renegotiating with Yahoo were so important.

Gaming

While loosening the belt on Xbox Live restrictions, Microsoft also saw a transactional increase in revenue growth per user for the service. Minecraft also helped skew some gaming numbers for first party revenue gains to the tune of 49% YoY

Office 365

While Office licensing numbers were down, Office 365 Consumer numbers are on the rise. With a 35% sequential growth, Office 365 subscriptions number have now topped over 12.4 million.

Conclusion

From the looks of it, Microsoft is seeing the seeds from the last few years of transition finally blossoming, albeit at the cost of their traditional bank-breaking profits. Many of the company’s cloud driven businesses are seeing growth. Commercial Cloud revenue grew 106% with annualized revenue run rates of 6.3 billion dollars. Azure is experiencing doubled growth in usage as well enterprise mobility customer growth of over 70%, resulting in a 7x increase in the company’s install base. I’m pretty sure investors will continue to see a mixed bag of results for the next few quarters as Microsoft continues to consolidate and transform its business strategy. While Microsoft’s plan B may be taking a bit longer to develop than investors would like, fortunately for the company, they enacted plan B while there is seemingly time to do so.

Kareem Anderson

Networking & Security Specialist

Kareem is a journalist from the bay area, now living in Florida. His passion for technology and content creation drives are unmatched, driving him to create well-researched articles and incredible YouTube videos.

He is always on the lookout for everything new about Microsoft, focusing on making easy-to-understand content and breaking down complex topics related to networking, Azure, cloud computing, and security.

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Kareem Anderson

Networking & Security Specialist

He is a journalist from the bay area, now living in Florida. He breaks down complex topics related to networking, Azure, cloud computing, and security

With KB5043178 to Release Preview Channel, Microsoft advises Windows 11 users to plug in when the battery is low#

Copilot in Outlook will generate personalized themes for you to customize the app#

Microsoft will raise the price of its 365 Suite to include AI capabilities#

Death Stranding Director’s Cut is now Xbox X|S at a huge discount#

Outlook will let users create custom account icons so they can tell their accounts apart easier#

Microsoft’s Q3 FY2015 earnings reflect a company transitioning to the cloud#

Windows & Office#

Bing#

Gaming#

Office 365#

Conclusion#