Subscriptions nourish Microsoft while its hardware businesses go hungry

By Aarthi Rayapura February 2, 2017

Excerpts from an article by Mark Hachman in PC World

For several years, Microsoft truly believed that a fleet of hardware devices could carry its software into homes and businesses. Based on news around the company’s fourth-quarter earnings report, though, it feels a little like Microsoft’s landed safely on the shores of a new world, and is burning the ships that took it there.

That a software company should make its money from software and services certainly isn’t news. And Microsoft still continues to sell hardware—the Surface lineup, for example, recorded another billion-dollar quarter in Microsoft’s. But how many PCs, phones, and tablets actually run Windows 10? For the first time in recent memory, Microsoft didn’t say.

Microsoft is embracing subscription services, and that bet is paying off. Office was a huge winner during the quarter, with Office 365 commercial revenue up a whopping 47 percent, and Office consumer products and services up 22 percent. That’s the power of recurring subscription revenue, and gently locking in customers through force of habit. Oh, and Microsoft’s Azure cloud computing services? Up 93 percent, year over year. Those are the numbers that dominate Wall Street conversations, leaving the hardware business begging for attention.

Read the full article on PC World

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