There’s a new era upon Microsoft: Windows 10 is here, the company’s phone strategy is shifting, and all this spells significant changes to how the company makes its money. Now it’s time for Microsoft to reveal its latest quarterly financial performance, and while it can point to a lot of successes – growing revenue in cloud services, Office products, and servers – there’s a bit of an across-the-board slump, with especially pronounced hits in phone revenue.

All told, Microsoft’s looking at a quarter where it brought in some $23.8 billion in revenue, leading to a net income of just about $5.0 billion.

Compared to the same period one year earlier, though, those figures are substantially down, coming from $26.4 billion revenue and a $5.8 billion profit. Microsoft still managed to beat expectations, and taking that into account, even this sagging income could still be a win.

As we’ve been used to seeing, Microsoft appears to be doing well with its tablet business, and it reports Surface revenue up a healthy 29 percent – to the tune of hitting $1.35 billion in income. But even some big mobile-device success there can’t distract us from declining phone revenue, down a staggering 49 percent.

To be fair, Microsoft doesn’t seem surprised at this change, and points to its new mobile priorities as the contributing factor to that hit. Even if that’s largely a conscious change, though, it’s one critics are sure to latch onto, especially as new devices like the Lumia 950 models face ongoing market scrutiny. Will the promise of the Surface phone (or however it ends up launching) put the spark back in Microsoft’s phone efforts? Perhaps, but we wouldn’t be betting on phone revenue appreciably rebounding in the interim.

Source: Microsoft

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