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Sales of video games have also risen with people looking for ways to pass the time while stuck at home. That’s made up for weaker one-time software purchases by smaller businesses and consumers.
“The pandemic and work-from-home has caused some information technology guys to move faster on building out a public-cloud strategy,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. “They have also made some big headway in market share from where they were in cloud just three years ago. Microsoft has done a good job in not letting AWS just blow them out of the water.”
Microsoft shares were little changed in extended trading following the report, after rising 1.5 per cent in New York. The stock rose 3.4 per cent in the September quarter, lagging behind the 8.5 per cent increase in the Standard & Poor’s 500 Index.
Azure revenue rose 48 per cent, compared with a 47 per cent gain in the prior quarter. Analysts polled by Bloomberg on average projected sales of Azure cloud services to increase by 45 per cent. Three years ago, Azure revenue had been almost doubling each quarter, and that growth rate has been closely watched among investors.
Commercial cloud sales rose 31 per cent to US$15.2 billion in the period, Microsoft said in slides posted on its website. Gross margins in that business widened by 5 per cent, mostly because of an accounting change. Revenue from Xbox content and services soared 30 per cent, and sales at the LinkedIn professional-networking service gained 16 per cent.
Next month, Microsoft will launch a new version of its Xbox video-game console — right at a time of high unemployment, particularly among young people. The company is hoping to entice users by offering payment plans, a cheaper model that will go for US$300, and programs that give buyers a new machine and a subscription with hundreds of games for a monthly fee.