Microsoft Q2 Earnings: Surface Sales Spike; Lumia Phone Sales Halved

By Steve Pak / 1454040900
(Photo : Facebook) Microsoft is planning to release Windows 10 Mobile ROM for the upcoming smartphones like Xiaomi Mi 5 and OnePlus 3.

Microsoft has just published its fiscal Q2 2016 earnings report showing that the OS giant earned $6.3 billion in net income based on $25.7 billion in revenue. The company's sales for Surface tablets , and cloud and server businesses are growing, while its Windows Phone sales figures were very low.  

Microsoft is relying on other sources of revenue besides its Windows 10 OS. The cloud and server products are helping to balance losses from its operating system business, according to The Verge.

Surface's Q2 year-over-year revenue is up 29 percent to $1.35 billion. Microsoft shared that the boost was driven by Surface Book and Surface Pro 4 sales.

Meanwhile, Windows Phone revenue plummeted 49 percent year-over-year. Microsoft recently launched the Lumia 950 and Lumia 950 XL models, but only sold 4.5 million smartphones in the second quarter compared to 10.5 million in Q2 of 2015.

It has been rumored that Microsoft will stop producing its Lumia phones and launch a Surface phone to replace it, according to Tech Radar. The goal hopes to end the slide of its smartphone sales.

Microsoft's Windows 10 sales continue to drop as PC sales also slide. Windows OEM Pro revenue dropped 6 percent during Q2, which was about half of last year's decline.

The Washington-based company is losing revenue from both mobile phones and OS software. However it is planning to roll out big updates to Windows 10 during the next months, including upgrades to the Edge browser and Cortana personal assistant.        

Microsoft's business products and cloud services are still growing. Office 365 revenue spiked 70 percent, while its subscribers rose to 20.6 million during Q2. Meanwhile, server products and cloud services rose 10 percent, and Azure revenue  had a big jump of 140 percent.  

Finally, the Bill Gates co-founded company's gaming business continues to grow. It reported that Xbox Live's monthly active  users (MAC) rocketed 30 percent year-over-year to 48 million.

On the other hand, Xbox hardware sales dropped due to declining Xbox 360 sales figures. More gamers are switching to the newer Xbox One gaming console.

Microsoft's Build 2016 developers conference will start on March 30. The company's officials claim it sold out in five minutes.