Microsoft profits drop 10% in Q3 2014

Microsoft profits drop 10% in Q3 2014

Following on from Electronic Arts and Nintendo, Microsoft has also released its Q3 financial results for the three months ending December 2014 – but it’s not quite as good news for the Xbox and Windows owner.

Following a reorganization of the company after it purchased ailing mobile company Nokia in September 2013, Microsoft reported that profits had fallen by more 10% for the quarter, compared to the same period in 2013. The technology company purchased the Finnish mobile company’s Devices & Services business and all related patents for a total of €5.44bn ($7.2bn). The deal went through in April of last year, following approval from Nokia’s shareholders and a green light from business regulators.

Revenue from the corporation’s Windows operating system fell by 13% over the quarter, further evidence of slow take-up of its divisive Windows 8. 1 operating system. A new version of Windows, Windows 10, is expected to go on sale later this year. Consumers who already own Windows 7 or Windows 8.1 will be able to upgrade to Windows 10 free of charge within the first year and receive free updates for the lifetime of the OS. The company also defied expectations that its new software would adopt a subscription model, which had widely been expected following the launch of the optional Office 365, which charges a monthly fee to users.

Despite this, sales of Xbox consoles and software enjoyed a boost over the holidays following a price cut in North America, which saw sales of its latest Xbox One games console overtake those of its rival Sony’s PlayStation 4. Microsoft has said that it sold over 6.6m Xbox units in the period September-December, though it isn’t clear how many of those were Xbox One units and how many were for its previous-gen system, the Xbox 360. So far, lifetime sales of the Xbox One have lagged behind the PlayStation 4 – though the gap is narrowing.

Sales also increased overall, with the company reporting $26.5bn billion in revenue over the period – higher than had been previously expected.

“We are taking bold steps forward across our business,” said Chief Executive Satya Nadella, who took over the role from Steve Ballmer back in April, “specifically with Windows 10, to deliver new experiences, new categories and new opportunities to our customers.”

Moving forward, Microsoft’s Xbox One has a busy year ahead of it. High-profile exclusives due for the console this year include Halo 5 Guardians, Scalebound, Fable Legends, Crackdown and Remedy’s sci-fi adventure Quantum Break – which will also be accompanied by a tie-in tv show following the game’s villain.

With Nintendo and Microsoft now having released their results, all eyes will be on Sony to see whether drastic measures to reduce the company’s massive debts have been successful. Despite the success of PlayStation 4, Sony’s wider financial problems have seen the company lay off thousands of workers, as well as selling entire divisions and large chunks of its real estate in an effort to lower its costly overheads.

Chris Morgan

Chris Morgan

Founder, Editor in Chief
When Dale isn't crying over his keyboard about his never-ending workload, he's playing games - lots of them. Dale has a particular love for RPGs, Roguelikes and Metroidvanias.
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  • GRIBBLEGRUNGER

    Gaming div enjoyed sales boost regardless. As a company, MS is still healthier than the pauper sony.

    WORLDWIDE Sales Fact :
    MS Platforms >>> ps1, ps2, ps3, ps4, psp, psvita combined

  • Guest

    So what? It’s still Billions of dollars in profit, unlike the other major player in the videogame business ($0N¥ – zero dollars and no yen), who posts nothing Billions of dollars in losses every year for the past decade.

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