Microsoft is swapping the desktop for the cloud as profits fall 6.5%

Out with PCs, in with the cloud: Microsoft's new chief exec Satya Nadella is off to a solid start and has a plan to turn the Titanic around.

by Rachel Savage
Last Updated: 25 Apr 2014

Taking the helm at Microsoft, as only the third chief executive in the company’s 40 year history, was never going to be a walk in the park for Satya Nadella. However, he’s off to a pretty good start, delivering a solid first set of quarterly results. More importantly, though, Nadella is a man with a plan.

To the numbers, first. Revenues for the quarter to the end of March were broadly flat at $20.4bn (£12.1bn), while net profits fell 6.5% to £5.7bn. Not exactly stellar, but better than analysts had expected, giving the tech giant’s shares a 3% boost in after-hours trading.

However, Nadella seems to have grasped the nettle that is the fast-fading PC market, which has been dragging Microsoft down as it sells increasingly less computer software. Instead, the new boss wants his company to be all over the cloud (unsurprising, given he previously headed up that part of Microsoft’s business) and on everyone’s smartphones.

‘In a world of ubiquitous computing, we want Windows to be ubiquitous,’ Nadella said in an investor conference call. ‘I see a world where… all experiences are powered by ambient intelligence,’ he added, whatever that means.

Thankfully for Microsoft and its investors, Nadella’s vision isn’t limited to weird techspeak. Last month the company launched Office for Android and iOS (which Apple chief exec Tim Cook admitted yesterday ‘does help’ iPad sales), moving away from dependence on its own relatively unpopular phones (although it's still ditching the Nokia name after buying the Finnish company's mobile manufacturing arm last year)  and tablets.

Sales of the company’s Azure cloud platform were up 150% and it added 1 million new Office subscribers in the quarter, Nadella said. With companies still shunning Apple software, Microsoft’s future may be both bright and cloudy.

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