Microsoft survives PC Armageddon from its view up in the cloud

Inside Microsoft's flagship store...that looks a little like an Apple store
Inside Microsoft's flagship store...that looks a little like an Apple store

Microsoft's cloud business is booming at a perfect time.

PC sales are seriously dreadful, falling 8.3% in the last quarter of 2015, according to Gartner. Normally, you'd think that would be horrible news for a company that makes the world's leading PC operating system.

But Microsoft (MSFT) was buoyed by its surging cloud business, which is giving cloud leader Amazon (AMZN) a serious run for its money.

Windows sales slumped. Phone sales tanked.

And worst of all, the super-strong dollar made its products expensive around the globe.

Yet Microsoft had a pretty decent quarter, all things considered. Shares were up 4% in after-hours trading.


Final quarter of 2014: $26.1 billion
Final quarter of 2015: $25.7, down 2%

Microsoft's sales beat Wall Street's expectations. And they would have been up 3% if not for the strengthening dollar, Microsoft claims.

(For those scoring at home, Microsoft's sales figures include $1.9 billion revenue that it has deferred for accounting purposes, related to sales of Windows 10 and Halo 5).


2014: $5.8 billion
2015: $6.3 billion, up 8%

Microsoft's adjusted profit (including deferrals), soared, thanks in large part to growing cloud sales.


2014: Sales down 13%
2015: Sales down 5%

There weren't a lot of PCs stuffing stockings during the holidays. Yet Windows fared better than the overall PC business.

Windows 10 has been a runaway success, installed on more than 200 million devices so far. But Microsoft has been giving it away as a free update. That has helped boost downloads while doing little to drive PC sales.

Office 365

2014: 9.2 million subscribers
2015: 20.6 million subscribers, up 124%

Office 365 has been a runaway success. The Office subscription service asks customers to pay Microsoft an annual fee to get constant Office updates, rather than buy new versions of Office every few years.


2014: $6 billion
2015: $6.3 billion, up 5%

Microsoft's fastest growing business is helping offset ongoing weakness in Windows sales. With its cloud business, Microsoft is hosting companies' content, websites and apps on its own massive data centers.


2014: $1.1 billion
2015: $1.4 billion, up 29%

Surface has become a huge hit after struggling mightily in its past iterations. Microsoft released its high-end Surface Book last quarter to compete with the MacBook Pro.

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