Microsoft’s Windows revenues crashed: The difficult process in technology companies continues

Microsoft recently released its second quarter results for fiscal 2023. Software giant Microsoft posted revenue of $52.7 billion and net income of $16.4 billion in the second quarter. In the related period, revenues increased by 2 percent, while net income decreased by 12 percent.

Challenging times continue for technology companies, with high inflation, high interest rates, inflated demand during the pandemic, supply problems and changing consumer behavior. In this context, there has been a serious decline in almost all the services Microsoft offers to “consumers”. But there are also good things for the company.

Cloud technologies became Microsoft’s savior

As always for Microsoft, it was Office, cloud and server products that drove revenue in the second quarter. Microsoft’s cloud revenue has had a major impact on this quarter’s earnings, with public smart cloud revenue increasing 18 percent year over year to $21.5 billion. Microsoft announced that it would lay off 10,000 people to get through the difficult period with minimum damage. Microsoft’s austerity policy hasn’t stopped the company from investing another $10 billion potentially in ChatGPT creator OpenAI. Microsoft and OpenAI announced the other day that they entered a long-term partnership. On the other hand, Office revenues increased by 12 percent in the related period, reaching a total of 63.2 million.

Microsoft’s product division, which includes Windows, Xbox and PC hardware, lost 19 percent in annual revenue and declined to $14.2 billion. Windows OEM revenue, the price PC manufacturers pay Microsoft to embed Windows into machines, slumped 39 percent in the second quarter. This decline is directly related to PC sales, which have experienced the biggest drop in recent years. Similarly, Xbox revenues fell 12 percent and device revenues fell 39 percent.

According to Jesse Cohen, senior analyst, Microsoft’s cloud Azure service and server technologies are performing surprisingly strong, easing investor concerns about the company. However, revenue losses are expected to continue throughout this year. On the other hand, it should be noted that this situation will not be limited to Microsoft.