Microsoft has posted $3.1 billion in profit for the second quarter of 2016, a significant improvement from the same period last year. The software giant had previously sustained a $3.2 billion loss in Q2 2015; largely due to writing down on the value of assets bought from Nokia.
The renewed profits come amid a marked slowdown in the PC market. As expected, the revenue from phones dropped by 71-percent, dragging the revenue from the segment down by 4-percent. Despite this, Microsoft is showing encouraging numbers.
Sales to Windows OEM’s increased by 27-percent, while Xbox Live users jumped by 33-percent. Revenue from Surface devices also increased by 9-percent, fueled by sales of the Surface Pro 4 and Surface Book. Overall, CEO Satya Nadella’s leadership appears to have had a positive effect on Microsoft’s core business.
The biggest improvement for Microsoft comes from the Azure cloud service, which saw revenue more than double over the previous year. This amounted to $6.71 billion, which is an impressive display of Microsoft’s ability to compete with Amazon’s leading cloud service. Overall, revenue for Q2 2016 amounted to $85.3 billion.
On the surface, it appears that the decision to reduce focus on smartphones and mobile devices has paid off for Microsoft. Nadella’s two years in charge have turned the company around, and shown that the software-as-a-service concept is the way to go. However, these financial results may be the death knell for Windows phones; seeing as the division is the worst performing of the lot.