14 DAY TRIAL // Microsoft has published its financial report for the first quarter of FY2016 today, revealing a decline of 12 percent year on year, as several of its divisions experienced a drop as well.
But what's interesting to notice is that the so-called “More Personal Computing” business (this is the exact name that the company is using in the financial report) is the one with the biggest decline, as nearly every single category included here went down during the quarter.
Specifically, the More Personal Computing as a whole dropped 17 percent in the first quarter of fiscal year 2016, Microsoft reveals, but the phone unit is the one that actually collapsed.
Phone revenue declined 54 percent “in constant currency reflecting our updated strategy,” as Microsoft itself says, which does nothing more than to show that the company urgently needs an overhaul of its smartphone lineup. The drop is mostly caused by the lack of new phone models, but things are expected to change in the next quarter, when devices such as Lumia 950 and Lumia 950 XL are very likely to drive sales forward.
Fewer devices for increased sales
One of the key points of Microsoft's “updated strategy” is the increased focus on a smaller number of phone models, with pundits claiming that the revamped lineup would only include 6 different devices, two in each of the following categories: value phones, mid-range models, and flagships.
Aside for the phone business, Windows OEM revenue also declined 6 percent, but Microsoft says this performance isn't at all below expectations. This figure is actually proof that Windows OEM sales were better than the overall PC market during the quarter, “as the Windows 10 launch spurred PC ecosystem innovation and helped drive hardware mix toward premium devices.”
The only good news here is brought by search advertising revenue and the number of Xbox Live monthly active users. The former increased by 29 percent thanks to Bing's growing US market share (following the arrival of Windows 10), while the latter increased 28 percent to 39 million.
Microsoft says that all of businesses should perform better in the next quarter, but the company also claims that all these figures actually point to “strong performance.” Windows 10 is expected to be the main catalyst of the growth, but only time will tell if the new OS has what it takes to support Microsoft's ascension.