The transformation of its business model has made Microsoft improve the annual profit by 26%. The data has been presented by Microsoft itself in its second quarter results report for 2017. Here we can see double net profits compared to the same period last year, from 3.120 billion dollars in the second quarter of 2016 to 6.150 billion dollars in the second quarter of this year
A good example of this transformation is that, for the first time, Redmond’s have earned more revenue from Office 365 subscriptions, they have grown by 43% in the last year, than by purchasing Office software licenses. Driven by this trend, its turnover amounted to 23,317 million dollars, 13% more than in the same period of 2016.
It was the current CEO of the company, Satya Nadella, who has decided to change Microsoft’s business model to focus on the cloud, and was right. Revenue from the company’s Intelligent Cloud division has grown by 11% to $ 7.4 billion. Server products and services in the cloud have increased by 15% by themselves, while Azure’s profit has grown by 97%.
At the opposite extreme we have the division ‘More Personal Computing’, whose profits have decreased by 2% to 8.8 billion dollars. This decrease is mainly due to the Surface unit, as they have just received new models, and the last Surface Pro and Surface Laptop were launched at the end of the fiscal year, so they have not had time to make big differences.
You only have to compare the little rise that have had the Windows licenses or the Surface range with the spectacular numbers that Azure is getting, which has standardized the strategy of attracting Microsoft developers, for example, with a partnership with Red Hat and Other linux companies.
Another clear example is Office. Amy Hood, CFO of Microsoft, has told analysts that for the first time Microsoft makes more money with Office 365 subscriptions than with traditional Office licenses, but has not specified the differences. In any case, this reflects Microsoft’s success in transforming itself by embracing the cloud rather than conforming to traditional software as it has done so far.