Windows 10 is expected to boost revenues
Analysts expect that the launch of Microsoft’s (MSFT) latest operating system, Windows 10, will help its Devices and Consumer and its Commercial Licensing businesses. In 2Q15, the Devices and Consumer and the Commercial Licensing revenues for Microsoft were down 25% and 18% on a quarter-over-quarter and year-over-year basis, respectively. The end of Windows XP support led to lower revenues in this segment.
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Surface tablets and advertising revenue contributed to segment increase
A factor that contributed to the success of the company’s Devices and Consumer division was the 25% increase in revenue from Surface tablets, owing to the increasing preference of Surface 3 among consumers. A 23% hike in the search advertising revenue, strong holiday demand for Xbox consoles, and sales of 10.5 million Lumia handsets also boosted Microsoft’s revenues.
Microsoft’s Xbox games revenue increased 79%, partially offsetting the decline in hardware revenue, which took a huge hit due to the company’s cost reduction measures. Microsoft’s acquisition of Mojang, the maker of Minecraft, is expected to provide a strong push for Xbox sales.
Both Windows Phone revenue per device as well as Xbox revenue declined by around 20% despite strong sales by both Lumia smartphones and Xboxes during the holiday season. During the holiday season, especially Black Friday, Microsoft’s Xbox sales outweighed its peers Nintendo (NTDOY) and Sony (SNE). Microsoft sold ~917,200 total consoles, whereas Sony and Nintendo sold ~690,400 and ~581,800 total consoles, respectively.