Microsoft has reported significant revenue growth in the second quarter of fiscal year 2024. Their revenue reached USD 62 billion, which is an 18% increase from the previous period, while net income reached USD 21.9 billion, a 33% increase.
Main Revenue Sources and Contribution Changes
While the largest revenue still comes from the Office and cloud division, there has been a shift in the company's revenue contribution. With the recent acquisition of Activision Blizzard, Microsoft's gaming business has now become the third largest revenue generator, surpassing Windows in the hierarchy.
According to reports from The Verge, Microsoft's Gaming segment contributed USD 7.11 billion in revenue, while revenue from Windows was USD 5.26 billion. Though still far from the Office and cloud revenue, this marks a significant impact of the changes in Microsoft's business structure following the Activision Blizzard acquisition.
Revenue Dominance from Office and Cloud
Microsoft's revenue continues to be dominated by the Office and cloud divisions, contributing USD 13.47 billion and USD 23.95 billion respectively in the financial report. Both divisions account for almost 60% of the total company revenue.
While the Office and cloud divisions continue to experience solid growth, the shift in revenue contribution from the Microsoft Gaming division indicates Microsoft's ambitious diversification strategy in response to changes in the technology industry.
Challenges in Microsoft's Hardware Business
Despite releasing new products such as the Surface Laptop Studio 2, Surface Laptop Go 3, and Surface Go 4 at the end of 2023, revenue from the hardware segment has again declined.
Microsoft CEO, Satya Nadella, had previously indicated that the PC market had recovered after the pandemic, but the decline in revenue from the Surface business in the recent quarters indicates that there are still challenges in this segment.
Strategic Moves for Growth and Innovation
With the market conditions constantly changing and competition intensifying, Microsoft is taking strategic steps to sustain growth and innovation across its various business divisions.
Through acquisitions like Activision Blizzard and innovative breakthroughs in the Office, cloud, and gaming divisions, Microsoft continues to adapt to remain relevant in the dynamic world of technology.
