Microsoft gets more revenue from Office 365 subscriptions than from Office licenses

For the first time, Microsoft has generated more revenue from Office 365 subscriptions than from its traditional license sales for the business suite. Microsoft sold fewer Surface and Xbox devices, but saw its revenue from cloud services rise sharply.

Office 365 business subscription revenue grew 43 percent in the past three months, helping Microsoft’s Productivity and Business Processes division grow 21 percent to $8.4 billion. 22 billion euros. Microsoft introduced Office 365 six years ago as a software-as-a-service, in addition to traditional Microsoft Office licensing sales.

Microsoft’s Intelligent Cloud segment, which includes Azure services, saw revenue rise to $18.9 billion. Microsoft CEO Satya Nadella said the company is on track to meet its $20 billion cloud revenue target set two years ago by fiscal 2018. He said that during the discussion of the quarterly figures, of which Seeking Alpha has a transcript. Azure services revenue increased 97 percent year-over-year.

Surface device sales fell 2 percent, but Microsoft hopes sales will pick up from this quarter, with the arrival of the Surface laptop and the Surface Pro update. Xbox console sales also fell, but Xbox software and services revenues made up for it; which increased by 11 percent. The number of Xbox Live users increased by 8 percent to 53 million.

The Personal Computing division, which includes Windows, had revenues of $8.8 billion in the past quarter, a decrease of 2 percent. Microsoft attributes this partly to a decline in the smartphone branch. Smartphone sales fell by $361 million from last year. The remaining turnover is too low to mention in the quarterly figures, according to Microsoft.