Microsoft reports sinking Xbox revenue as its cloud business climbs
Xbox hardware revenue took a 33 percent hit, even as Microsoft reported a total revenue of $82.9 billion. This decline in Xbox hardware revenue, despite overall growth, is part of Microsoft’s broader consumer-focused division challenges. Meanwhile, Microsoft’s cloud and productivity businesses are performing strongly, with cloud revenue reaching $54.5 billion—a 29 percent year-over-year increase. The AI business alone surpassed $37 billion in annual revenue, marking a 123 percent growth. Azure saw a 40 percent increase in revenue, and Microsoft 365 Copilot’s paid seats grew from 15 million to 20 million. Microsoft 365 consumer cloud revenue increased by 33 percent, while its commercial segment grew by 19 percent. The Windows OEM and devices business, however, saw a 2 percent decline due to a global memory shortage, prompting price hikes for Surface devices. New Surface Pro and Surface Laptop models are expected to help reverse this decline. Microsoft has also seen significant executive changes, with Phil Spencer retiring as Xbox CEO and Sarah Bond leaving as Xbox president. Asha Sharma, previously from Microsoft CoreAI, now leads Xbox. Sharma has already lowered Xbox Game Pass prices and is working to rebuild Xbox’s identity. Microsoft continues to expand its AI integration across productivity tools, including new features in Excel, Word, and PowerPoint.
Source: The Verge