Microsoft execs continue to talk up dual consumer/enterprise usage patterns and bring your own device trends, but it's still unmistakably enterprise software and services that are fueling the company.
Because of the way Microsoft reports its revenues, it's not a simple to divide the company down "Devices & Consumer" and "Commercial" lines as a way of comparing the company's consumer vs. enterprise products and services.
One of the drivers in the quarter was Microsoft's Windows OEM revenues -- specifically Windows OEM Pro revenues attributable to business PCs. Those Windows OEM Pro revenues are reported under Devices & Consumer (D&C). The money-losing Phone Hardware (Nokia) business also is reported under D&C yet no doubt includes some phones purchased as "work" phones. It really is impossible to determine exactly how much of the $10.0 billion in revenues that Microsoft garnered from D&C came from "consumer" product and service sales.
That said, the entire Microsoft Commercial segment, which brought in $13.48 billion in revenues, is comprised of enterprise products and services. "Commercial cloud" -- a k a Office 365, Azure, Dynamics CRM, Exchange Online, SharePoint Online, Lync Online and Intune -- is now at an annualized run rate of more than $4.4 billion, according to the company. Commercial Cloud plus other enterprise services, like consulting, totalled $2.26 billion in revenues for the quarter. Server products, including Windows Server, SQL Server and System Center, brought in another $11.2 billion.
There were a few bright spots among the company's consumer-focused products in its latest quarterly report. Office 365 Home and Personal subscribers hit 5.6 million, up from 4.4 million in April. On the Surface front, Microsoft is transitioning to Surface Pro 3, which has better gross margins than its the preceeding Surface lines. But Microsoft did take a gross margin hit by deciding "to not ship a new form factor," meaning the Surface Mini, officials acknowledged during today's earnings call.
"Our experiences are available on all devices," Nadella emphasized. "Mobility means more than just phones and tablets."
"We made progress with a number of our consumer businesses in the quarter," Chief Financial Officer Amy Hood told analysts and press on the earning call.
Nadella acknowledged that MSN, retail stores and hardware are not among Microsoft's core area of focus and likely places where Microsoft will be looking to insure "discplined execution" going forward. (Does that mean more layoffs or cutbacks? We didn't get further word.) And with Xbox, the focus clearly is back on gaming, rather than attempting to pitch that platform as a broader entertainment hub, he made clear, given gaming is one of the primary "digital life experiences" in which users are interested and Microsoft plans to address.
Microsoft may have switched CEOs in recent months, but there's one place the company's messaging hasn't changed -- in insisting Microsoft doesn't want to be an IBM and focus on the enterprise... even if that's what some on Wall Street and a number of its enterprise customers would prefer it to do.