Microsoft’s Earnings Reflect the Increasing Importance of Cloud to the Bottom Line

Microsoft’s earnings were published yesterday, and they were a blow-out.  In particular, the Enterprise Services division, which includes Office 365 and Azure, grew in both revenue and profit.

The company’s commercial revenue grew 10% to $12.67 billion, boosted largely by revenue from commercial cloud services, which Microsoft said more than doubled but did not indicate the dollar amount cloud computing brought in. Kevin Turner, Microsoft’s chief operating officer, did say that the boost in cloud services revenue came from customers “embracing” products like Microsoft Office 365, Azure and Dynamics CRM Online. The company said that Office 365 commercial seats and Azure customers both grew by triple-digits.

As desktop revenue shrinks due to a slow down in PC shipments, Microsoft’s commercial division is up 10% in Q2.  For Azure and Office 365, the growth rate of more than 100% year over year shows the shifting of the IT world from desktop to cloud.