We recently reported that in the last quarter PC sales grew faster than they did since 2012, and today Microsoft’s FY Q1 2020 financial report corroborated this finding, with strong growth in the sales of Windows.
Windows OEM revenue increased 9% (up 9% in constant currency). Microsoft reports there is “healthy Windows 10 demand and strong momentum in advance of Windows 7 end of support.”
Windows non-Pro revenue, however, continued to slide, shrinking 7% YoY, though this is slower than the previous quarter. Microsoft says this does not fully reflect the consumer PC market, as buyers continue to purchase cheaper entry-level PCs which generate less revenue for Microsoft.
Windows Commercial products and cloud services revenue grew 26% (up 29% CC) driven by an increase in Microsoft 365 agreements, which carry a higher margin.
Overall Microsoft’s More Personal Computing revenue grew 4% (5% in Constant Currency), driven by a shift to higher-margin business while operating income grew 28% (31% in Constant Currency).
One of the contributors to the increased profit is the “redeployment of engineering resources“, suggesting Microsoft is moving its engineers from Windows to other parts of the business.
Read the rest of Microsoft’s earnings here.