While mobile and hardware sales lag, Microsoft is placing more focus on its cloud services and software.
Microsoft has released its second quarter earnings report for 2016, which illustrates some interesting transitions the company has been undertaking. Primarily, sales of its hardware and devices are on the decline, but this is not so for all of the tech giant's divisions. In their earnings report, Microsoft placed focus on its cloud-based services, quoting CEO Satya Nadella when he explained that "businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas." However, it's not all bad news for Microsoft's hardware, particularly in the wrap-up of 2015. "It was a strong holiday season for Microsoft highlighted by Surface and Xbox," touted Microsoft's COO Kevin Turner.
According to Microsoft's AFO and Executive VP Amy Hood, the company has been busy "investing in key strategic areas that position Microsoft for continued long term growth." This investment was reflected in the company's revenue breakdown, which showed a 2% and 5% decline in "Productivity and Business Processes" and "More Personal Computing" revenue respectively, juxtaposed to a 5% growth in Intelligent Cloud revenue. In addition to its corporate strategy of cloud services investment, Microsoft has also been expanding its software to other operating systems, such as releasing News Pro or Word Flow for iOS, along with releasing Cortana, Office 365, and other apps for and Apple and Android ecosystems. While it's likely that Microsoft's hardware division isn't going anywhere soon, 2016 will be a critical year to see the extent of their continued prioritization of services.
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