It’s Microsoft’s turn to share its quarterly results. And its gaming division is particularly attracting attention: it has recorded a significant increase, while Xbox sales are in free fall.
All in on cloud gaming
Over the July to September period, revenue from Xbox content and services increased 61% compared to the previous quarter. An increase that the Redmond firm attributes in part to the acquisition of Activision Blizzard.
On the other hand, profits from the sale of hardware, and more particularly from the Xbox, fell again by 29%. These figures support the strategy now chosen by Microsoft: favoring cloud gaming over its console. This year, the company announced that it would launch Xbox exclusives on Switch and PS5. It also launched a new offer for its Xbox Game Pass, marking its ambition to depend less on the physical.
The cloud on the rise
In total, the software giant recorded revenue of $65.5 billion, an increase of 16% compared to the same period of the previous year. That’s better than Wall Street analysts’ forecasts. Its net profit increased by 11% to reach $24.7 billion.
The Intelligent Cloud division, which includes Azure, Windows Server and enterprise services, generated $24.09 billion in revenue. This is a notable increase of 20%, but well below Google Cloud, which saw its revenues explode by 35%.
“ AI-driven transformation changes work, work artifacts, and workflow across every role, function, and business process. We expand our opportunities and win new customers by helping them apply our AI platforms and tools to drive new growth and operating leverage “, commented Satya Nadella, CEO of Microsoft, in a press release.
Some fears
At the same time, Microsoft continues its heavy investments in artificial intelligence, to the point that its shareholders monitor its expenses very closely. The company is expanding its infrastructure and injecting more and more into its supply of chips, essential to cope with larger workloads.
She expects less growth from Azure in the current quarter, which has further worried investors. Amy Hood, Microsoft’s chief financial officer, said this was a result of data center capacity constraints.
- Revenue from Xbox content and services increased 61% from July to September.
- Still, Xbox sales have plummeted.
- Microsoft performs well in the cloud, but investors worry about AI spending.
