Microsoft Corporation’s Q1 2014 earnings release under the new Chief Executive Officer Satya Nadella offers validation for his focus on cloud computing. Under his leadership, the Redmond, Washington-based software giant has eased past analysts’ profit estimates, despite the pressure of falling computer sales and reported a Q1 2014 profit of $5.66 billion, or 68 cents per share.
From effect on April 8, Microsoft has also stopped providing support for its 13-year-old operating system, Windows XP. This has added to Microsoft’s benefit as many companies paid to upgrade computers ‘en masse’ to ensure that they continued receiving support from the software giant, including anti-virus updates. This transition has not only contributed to a 4 percent increase in Windows revenue, but also helped Microsoft buck a 2 to 4 percent decline in personal computer shipments in Q12014, report market intelligence firms Gartner and IDC.
Microsoft’s commercial profits were up 7 percent to $12.23 billion. This can be attributed to the growing acceptance and demand for its Office 365 productivity software. The company has been transitioning customers to pay for an annual subscription as opposed to updating older versions once every few years. This is meant to smooth out and raise revenue over time.
At the recent quarterly earnings conference call, Nadella told investors that Office 365 was the core engine driving a lot of their cloud. For the past five years a Microsoft Chief Executive Officer had never joined a quarterly earnings conference call and this gesture itself marked a difference.
In the call he informed that the first weeks in his new job were taken up with getting to know the company afresh. Currently, he said, he is dealing with the reality of the new tech marketplace in which Microsoft has ceded its market dominance to Apple Inc and Google Inc.
Microsoft is constantly tailoring Office programs like Excel to integrate better with large pools of data that companies collect on remote servers so they can be accessed over the Internet. In this context Nandella said, “What you can expect of Microsoft is courage in the face of reality; we will approach our future with a challenger mindset; we will be bold in our innovation.”