During its FY14 Q1 results announced yesterday, Microsoft reported a significant decline in the revenue from its Devices & Consumer Licensing segment. This segment includes Windows OEM licensing, Office for consumers licensing and Windows Phone licensing. D&C Licensing revenue decreased $335 million or 7%, due mainly to lower revenue from licenses of Windows OEM and Consumer Office, offset in part by increased Windows Phone revenue. Windows Phone revenue increased $102 million, mainly due to increase in patent licensing revenue.
Revenue impacted by device market trends
- Windows OEM revenue
- Windows OEM Pro revenue, up 6%; second consecutive quarter of growth
- Windows OEM non-Pro revenue, down 22%; several points better than expected
- Excluding the impact of China, non-Pro revenue declined 17%
Office Consumer revenue
- Revenue declined although attach increased in the quarter
Impact of the shift to Office 365 Home Premium was generally in line with expectations
This is expected. Microsoft just cannot turn the tides in the segment which is affected by market trends where mobile devices are increasingly adopted by consumers around the world. Microsoft is in the process of acquiring Nokia in an effort to boost its mobile devices market share, and the new revenue model due to Nokia should partially offset the growing Windows Phone revenue in the coming quarters.