Microsoft software revenue grows to US$13.4b

Microsoft’s productivity segment, which includes its Office suite of workplace products such as email, grew by 13 percent in terms of revenue in the quarter ending in December, to US$13.4 billion.

Its cloud computing business segment grew by 23 percent to US$14.6 billion.

The most visible sign of that growth has been the rise of Microsoft’s workplace communications tool Teams, which has vied with Zoom and Slack as a must-have service for remote workers in the pandemic.

Software pioneer Salesforce, already a rival for Microsoft in selling customer relations software, announced in December it was buying Slack in a US$27.7 billion deal that could give Microsoft tougher competition when it closes later this year.

Microsoft’s personal computing business segment also grew by 14 percent to US$15.1 billion. Some of that stemmed from holiday gadget sales and Windows licenses for new computers sought by homebound workers, but the biggest boost to the segment was from the release of Microsoft’s new Xbox Series X console. Xbox gaming revenue grew by 40 percent over the same time last year.

“In the near term it’s more people at home playing games,” said Logan Purk, an analyst at Edward Jones who said the Xbox gains contributed to a “near-perfect” quarter for Microsoft. A shortage of consoles ahead of the holidays could also sustain some of that growth in the months ahead because of pent-up demand, he said.