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Microsoft earnings report: Surface saves Windows Phone blushes

Microsoft made $25.7 billion (£17.9bn) in revenue in Q2 of 2016, according to the company's latest earnings report, as Windows Phone continues to struggle.

Windows Phone revenue has fallen by 49 per cent year-on-year despite the recent launches of the Lumia 950 and 950 XL, further condemning the smartphones as an afterthought in the market. This is also reflected in device sales, which have fallen to 4.5 million compared to the 10.5 million sold the year before.

One area that is looking good for Microsoft is the Surface, with revenues increasing by 29 per cent to $1.35 billion (£940 million) thanks to the performance of the Surface Book and Surface Pro 4 devices.

Microsoft's cloud services unit is also also growing, with the number of Office 365 subscribers increasing to 20.6 million and revenue up 70 per cent. Furthermore, revenue from server products and cloud services grew 10 per cent in the quarter, with Azure revenue jumping up by a massive 140 per cent.

Gaming is a bit of a mixed bag. Whilst the number of Xbox Live monthly active users has increased by 30 per cent year-on-year to 48 million, hardware revenue dropped due to decreased performance of the Xbox 360.

Microsoft has been making efforts not to stand still in recent times, announcing the acquisition of reporting and analytics technology from Event Zero and updating its Surface line of devices.

Image Credit: Shutterstock / Peteri