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Microsoft Corporation Quietly Gives Up Smartphones
Microsoft Corporation (NASDAQ:MSFT) is in a very sweet spot at the moment. Even though the software cloud giant has no play in the smartphone market, it still found success in the sector. The company kicked off its fiscal first quarter with glowing results. Investors may only expect more positive developments ahead.
Microsoft reported revenue growing 12% Y/Y to $24.5 billion, led by the Productivity and Business Processes unit. The net income of $6.6 billion is a 16% improvement over last year. Cloud revenue is so big that Microsoft is now breaking down the quarterly revenues. On its earnings presentation, the company saw commercial cloud revenue soar to $5 billion, up from $3.2 billion last year. The sales far-exceed that of the last three quarters.
Investors should note that the pace of growth for bookings may slow. The uptick is due to expirations but in Q2, a drop of roughly 20% in expiration dollar volume will have an impact on Microsoft’s commercial bookings growth. It forecast a 7% sequential drop in unearned revenue for Q2. Despite the seasonal weakness, the company will keep up its historical gross margins rates.
Microsoft is disciplined. Instead of chasing Amazon.com, Inc. (NASDAQ:AMZN) by slashing prices to gain market share, it will cut costs or add value for customers. The cloud unit is still a small part of revenue and Microsoft is more than happy to grow its unearned revenue. All the while, it will sustain high commercial cloud gross margins — it was 57% in Q1, up from 49% last year.
Azure, Office 365 and Dynamics 365 gave gross margin the strong lift. Customer adoption of these products, along with customer acquisitions, will only ensure Microsoft reaches an annualized $20 billion in revenue as a baseline.
MSFT’s Solid Financial Performance
Microsoft’s quarterly results should impress value investors. The company returned $4.8 billion to its shareholders, through $3.2 billion in dividends and $1.7 billion in share buybacks. Free-cash flow grew 10% Y/Y to $10.3 billion. It would have been up 27% had unsettled cash equivalent positions of $1.3 billion been excluded.
Microsoft’s exit from the phone business actually took away the working capital commitments in the phone hardware. Together with strong billings and customers paying on time, investors should expect FCF going up for the rest of the year (excluding seasonality).
MSFT Makes Up For Lost Phone Market
Without the hardware component in smartphones, Microsoft is hardly doomed. Office 365 revenue increased 10%, while commercial revenue grew 42%. The productivity suite’s reach does not stop at the PC desktop at the office or home. Users may download Word, Excel, and PowerPoint apps to edit their documents stored in the Office 365 cloud. If they want more features, file management, and editing capabilities, users must pay for a monthly subscription.
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Microsoft launches preview of universal Word, Excel, and PowerPoint apps for Windows 10
Microsoft today launched the first part of its Office for Windows 10 in preview. You can download the new Word, Excel, and PowerPoint apps now from the Windows Store Beta that ships with the latest Windows 10 build.
Microsoft says the new Office for Windows 10 apps will work best on touch-enabled desktops, laptops, and tablets. The preview for the same apps will arrive on phones (and very small tablets) running Windows 10 “in the coming weeks.”
Office for Windows 10 (Word, Excel, PowerPoint, OneNote, and Outlook) is slated to arrive later this year. These new Office apps will be pre-installed (for free) on smartphones and small tablets running Windows 10, but will also be available for download from the Windows Store for other devices.
For context, a universal Windows app is Microsoft’s verbiage for an app that can run on Windows 10 across different form factors, including PCs, tablets, and phones. These Word, Excel, and PowerPoint apps are thus not only built for touch, but they are supposed to be the same app on all Windows devices.
Below is a recap of the new touch-optimized apps arriving today.
Word for Windows 10
The touch-optimized Word app lets you create, edit, review, and mark up documents. You can also share your work with others to collaborate in real time. The new Insights for Office feature (powered by Bing, and first available in Office Online) in Read mode brings additional online resources like images, web references, and definitions right into your reading experience.
Excel for Windows 10
The touch-optimized Excel app lets you create and update spreadsheets, analyze data, and visualize it with charts. The touch-first controls let you select ranges of cells, format your charts, and manage your workbooks. Microsoft claimed “you won’t even miss your keyboard and mouse,” but we’re doubtful.
PowerPoint for Windows 10
The touch-optimized PowerPoint app lets you create and edit presentations. It features a Presenter View for preparing, presenting, and even annotating your slides as you go.
Where is Outlook for Windows 10?
Microsoft first detailed these apps on January 22, promising a preview “in the coming weeks.” Now it has delivered Word, Excel, and PowerPoint. The OneNote app shipped along with the Windows 10 preview earlier this month, but the Outlook app is still missing.
On January 29, Microsoft launched Outlook for Android and iOS. The equivalent for Windows 10 is still in the pipeline; we’ve contacted Microsoft for more information and will update you if we hear back.
Update: “Outlook Mail and Calendar for Windows 10 will be available in the Windows 10 store at a later date, but we have nothing more to share on timing,” a Microsoft spokesperson told VentureBeat. The wait continues.
Nokia Asha 501 gets Microsoft Word, Excel and PowerPoint apps
Earlier this month, Microsoft acquired Nokia’s devices and services business and it seems we won’t have to wait long to see some kind of Microsoft flavor in Nokia’s Asha phones. Nokia has announced a toned down version of the Microsoft Office suite for the Asha 501 called My Pocket Office, which includes Word, Excel and PowerPoint.
Unlike the actual Microsoft Office apps, the My Pocket Office apps are basic in terms of functionality and only let you open and read documents that you’ve received in a mail or have uploaded onto the phone. All the three apps are differentiated by their color schemes. Sticking to their Microsoft Office lineage, Word sports a blue color scheme, Excel in green and PowerPoint in red.
Nokia has warned at the outset that the Office suite is in the beta phase and has its share of bugs, which it promises to iron out in the forthcoming updates. Hopefully, if this test is a success, Nokia will introduce the My Pocket Office apps on other Asha phones in the future.
For now, if you own an Asha 501, head over to the Ovi Store to download Word, Excel and PowerPoint.
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Nokia Asha software platform 1.0
Ballmer.REUTERS/Rick Wilking Microsoft seeks to fine-tune flagship Windows operating system blamed for PC slump
Microsoft will use its annual developers conference to release a preview of Windows 8.1, a free update that promises to address some of the gripes people have with the latest version of the company’s flagship operating system.
Many of the new features have been shown off already. The Build conference, which starts Wednesday in San Francisco, will give Microsoft’s partners and other technology developers a chance to learn more about the new system and try it out. It also will give the company a chance to explain some of the reasoning behind the update and sell developers on Microsoft’s ambitions to regain relevance lost to Apple’s iPad and various devices running Google’s Android software.
There’s also speculation that Microsoft could show off a new, smaller version of its Surface tablet computers. One of the new features in Windows 8.1 is the ability to work well on smaller-screen devices.
Windows 8.1 will be available as a preview starting Wednesday for anyone to download. It will be released to the general public later in the year, though a specific date hasn’t been announced.
Windows 8, which was released in October, was meant to be Microsoft’s answer to changing customer behaviors and the rise of tablet computers. The operating system emphasizes touch controls over the mouse and the keyboard, which had been the main way people have interacted with their personal computers since the 1980s.
But some people have been put off by the radical makeover.
Although Microsoft has said it has sold more than 100 million Windows 8 licenses so far, some analysts have blamed the lackluster response to the operating system for a steep drop in PC sales in the first three months of the year, the worst drop since tracking by outside research firms began in 1994.
Among the complaints: the lack of a Start button on the lower left corner of the screen. In previous versions of Windows, that button gave people quick access to programs, settings and other tasks. Microsoft replaced that with a tablet-style, full-screen start page, but that covered up whatever programs people were working on, and it had only favorite programs. Extra steps were needed to access less-used programs. Settings, a search box and other functions were hidden away in a menu that had to be pulled out from the right. How to do that changed depending on whether a mouse or touch was used.
And while Microsoft has encouraged people to use the new tablet-style layout, many programs — including Microsoft’s latest Office software package — are designed for the older, desktop mode. People were forced into the tablet layout when they start up the machine and had to manually switch the desktop mode each time.
Windows 8.1 will allow people to start in the desktop mode automatically. In that mode, it is restoring a button that resembles the old Start button. Although the Start button will now take people back to the new tablet-style start screen, rather than the old Start menu, the re-introduction of the familiar button may make it easier for longtime Windows users to get accustomed to the changes.
Other new features of Windows 8.1 include more options to use multiple apps. People will get more options to determine how much of the screen each app takes while showing up to four different programs, rather than just two. The update will also offer more integrated search results, showing users previews of websites, apps and documents that are on the device, all at once.
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