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Office revenue smells sweet even as PC sales stink it up

Gregg Keizer | July 22, 2013
Consumer sales plummet 27%, but business revenue salvages both Office and the company's overall quarter

Some analysts have called on Microsoft to produce and release Office on iOS and Android, and speculated that the company could reap billions from sales of such software. Microsoft delivered a subset of Office for the iPhone, the Office Mobile app, a month ago, but it has refused to commit to a suite for Android or Apple's iPad.

The quarter's numbers, however, seem to show that Microsoft's current approach of denying Office to Android and the iPad isn't hurting its ability to milk the suite, as it was able to grow MBD revenue even as PC shipments took a pounding for the fifth quarter in a row.

Likewise, there are clues that the strategy it's adopted for Office Mobile — tying the iPhone app to Office 365 — has potential: From March to June, projections of Office 365's annual income grew an amazing 50%, indicating that there are plenty of users able to run subscription-linked apps.

But Microsoft knows it has it has a hard row to hoe on its entire portfolio, including Office.

"I want to be very clear, we know we have to do better," said Amy Hood, the company's new CFO, during the call with analysts Thursday. "That's one reason we made the strategic and organizational changes we made last week. A transition of this magnitude takes time. We are confident we are moving in the right direction."


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