Microsoft doubles Surface sales with channel assist

Microsoft Corp. reported record revenue for its second quarter ending Dec. 31st, and a doubling of Surface sales with the launch of the second generation of the tablet and the first full quarter that select channel resellers have been authorized to sell them.

The software giant, which is reorganizing to become a devices and services giant, reported record revenue of $24.52 billion on the quarter, up 14 per cent from revenue of $21.45 billion in the same quarter one year ago. Operating income for the quarter reached $7.96 billion, up by three per cent from $7.77 billion one year ago.

“Our commercial segment continues to outpace the overall market, and our devices and consumer segment had a great holiday quarter,” said Microsoft CEO Steve Ballmer, in a statement. “The investments we are making in devices and services that deliver high-value experiences to our customers, and the work we are doing with our partners, are driving strong results and positioning us well for long-term growth.”

Microsoft’s devices and consumer revenue grew by 13 per cent to $11.91 billion. Weak demand from consumers for Windows laptops and PCs drove Windows OEM revenue down by three per cent, although growing demand in the commercial space did help offset that decline, thanks to a 12 per cent increase in Windows OEM Pro revenue.

Microsoft launched its second generation Surface 2 tablets in October, and Q2 was also the first full quarter of Surface distribution by select channel partners worldwide. Both factors helped more than double Microsoft’s Surface revenue, from $400 million in the first quarter to $893 million in the second quarter.

Overall, commercial revenue grew by 10 per cent to $12.67 billion. Microsoft reported that SQL Server and System Center revenue both grew by double-digits, commercial cloud services revenue more than doubled, and Office 365 commercial seats and Azure customers both grew triple-digits.

“We significantly outpaced enterprise IT spend as we continue to take share from our competitors by delivering the devices and services our customers need as they transition to the cloud,” said Microsoft COO Kevin Turner, in a statement. “Our commercial cloud services revenue grew more than 100% year-over-year, as customers are embracing Office 365, Azure, and Dynamics CRM Online, and making long-term commitments to the Microsoft platform.”

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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