Microsoft’s Earnings Show Why It’s Still A Threat to Apple and Google

Microsoft isn’t suddenly getting millions of users to switch to its Windows Phone or Windows operating systems, however that isn’t stopping the company from reaping record revenue, according to its quarterly earnings report.

Release today, the report doesn’t paint an overly rosy portrait of all the company’s consumer businesses. Revenue from PC vendors paying Microsoft to include Windows on their machines tumbled by 3% and that was only because businesses buying PCs helped to pick up the slack.

That aside, revenue to the Devices and Consumer group grew 13% to top $11.91 billion, pushing total company revenue to $24.52 billion in revenue company-wide. For comparison, Microsoft only had $16.1 billion in revenue during the same time last year.

It was able to reach that record thanks to growth in many of its consumer facing products. The company’s press release notes that Bing’s search share grew to 18.2%, helping it grow the amount of money it makes from consumers searching the internet by 34%. Equally important where the Xbox One, Xbox 360, Surface tablets and Office 365 subscription service.

Microsoft hasn’t yet revealed how many Surface tablets it managed to sell, however the company says that Surface revenue for the last quarter of 2014 doubled to $893 million. Accounting tricks from the $1 billion write-down it took last year on Surface units aside, that business seems to be finally getting off the ground.

Today’s reports indicate that Xbox One sales were right where they should be. While other outlets indicate that they were slightly higher than Microsoft reported earlier this month, this report says that Microsoft sold 3.9 million Xbox One’s “into the retail channel.” That means that Microsoft shipped 3.9 million consoles to retail partners total and puts Xbox One sales exactly where they announced them previously: 3.2 million. It’s worth noting that it also sold 3.5 million Xbox 36 consoles to retailers too.

All told, it’s the best quarter Microsoft has ever had in terms of revenue. Really, the only negative thing in the report seems to be that Microsoft’s Windows business has yet to stop bleeding sales. Also, Microsoft’s Windows Phone business isn’t even mentioned here. Clearly, that’s still being kept under wraps so that investors can’t compare its sales to those of iPhone and devices loaded with Android. It’s also worth noting that while Microsoft took in record revenue, its net income only hit $6.56 billion, which is a record for it.

Microsoft may be just a small player in the tablet and smartphone space, but clearly its initiatives are growing and it’s earning enough money to continue dumping that cash into markets where it’s behind. That still makes it a contender and an uncertain threat to Google, Apple and Amazon.