All About The Cloud
In the past I castigated Miscrosoft for its dismal top line growth. The company’s computer licensing business provided steady cash flows, but appeared to be an albatross pursuant to growth. Relying on consumers to pay for newer versions of the company’s suite of office products seemed rather old school. Times have changed. Last quarter revenue grew by 19% Y/Y; all major product groups grew by double-digits.
Office 365 commercial and consumer revenue grew in the high double digits on the strength of Office 365 subscriptions. Of note is that a “PC refresh”, driven by the enterprise, has seemingly awakened the personal computer market. The company’s total Personal Computer segment had revenue of $10.7 billion, up 15% Y/Y. Windows OEM revenue grew 8% on a higher mix of premium licenses, while Surface revenue bounced 14%. According to Gartner, worldwide PC shipments fell over 4% in Q4 2018. This could provide a headwind for subscriptions or Surface devices this quarter or next. Management’s outlook on PC shipments could be key.
The ultimately driver of revenue growth could be cloud services. Last quarter revenue from the commercial cloud was $8.5 billion, up 47% Y/Y. Azure revenue grew 76%, driven by the strength of per-user base businesses. Amazon (AMZN) continues to dominate the sector. Read more: