It's still the smallest of Microsoft's three major divisions, but it's growing rapidly - the division as a whole was up 15 percent year on year, and the Azure cloud service was up a whopping 98 percent.
Microsoft's coyness around Azure makes it hard to make a direct comparison with Amazon Web Services (AWS), but it does clump together a bunch of its cloud services under a "Commercial Cloud" heading to at least give us something; this includes Office 365, Dynamics 365, Azure and other cloudy things. Office 365 consumer subscribers also increased to 29.2 million in the quarter. Surface revenue increased just 1 percent year-on-year as sales of more premium devices were offset by lower volumes.
MICROSOFT NEEDS TO KICK a few sales folks in the posterior as its PC business remained stagnant in the second quarter despite the launch of three new Surface models a year ago.
Microsoft's Productivity and Business Processes unit, which includes commercial products under the Office branding and LinkedIn, also saw impressive growth, generating $9 billion in revenue, up 25% for the quarter. However, Microsoft did post a loss of $6.3 billion for the quarter due to a one-time tax charge of $13.8 billion stemming from changes to the USA tax system.
Microsoft reported a US$6.3-billion loss in its second quarter, reflecting a huge charge stemming from last year's tax-reform legislation.
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Microsoft's Q2 star was unquestionably the Intelligent Cloud division, which brought in revenue of $7.8 billion. Analysts and investors following Microsoft have wondered if Azure's growth would begin to trail off as the overall revenue number gets larger.
He continued: "Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth".
More Personal Computing business increased 2% with revenue of $12.2 billion and highlights include Surface revenue which increased by 1%, Gaming revenue also increased by 8% because of new hardware addition (Xbox One X), Windows OEM revenue increased by 4%.
"Microsoft continues to be a pillar of strength on the cloud front, and the Azure growth story is still in the early innings", says Daniel Ives, chief strategy officer at GBH Insights. This will be particularly disappointing for Microsoft, given that the first generation Surface Book was instrumental for boosting revenues in the previous quarter, yet the recently launched Surface Book 2 seems to have had a relatively poor reception.