Microsoft's smartpohone revenue drops 70% year-over-year in fiscal fourth quarter

Microsoft's smartpohone revenue drops 70% year-over-year in fiscal fourth quarter
Microsoft better come up with a strategy to fix its smartphone business, or else it is danger of disappearing completely. But maybe that is the strategy. After all, the company makes more money licensing its Android patents than it does by selling Windows Phone handsets. How desperate has the situation become? For the company's fiscal fourth quarter, revenue in the smartphone division declined 70% year-over-year. On the other hand, Surface sales rose 9% year-over-year. 

There still remains the possibility that Microsoft will release a Surface Phone sometime in 2017. There have been so many conflicting stories about such a device. Back in April, we passed along a rumor that called for three different versions of the phone. One would be for the enterprise, another would be designed for the average consumer, and the third would be made for the typical smartphone junkie and include extremely impressive specs.

This rumor has the Surface Phone powered by the unannounced Snapdragon 830 chipset, with 8GB of RAM inside. There is some talk that such a device will be made for the enterprise market only. The company's previous strategy of trying to profit in the consumer market is obviously failing, and the Surface name might have enough equity in the business world for Microsoft to concentrate on that end of the market.

For the fiscal quarter ended in June, Microsoft reported $20.6 billion in revenue, with $3.1 billion in net income, or 69 cents a share. For all of fiscal 2016, revenue was $85.3 billion with net income of $16.8 billion and EPS of $2.10. All of those figures are using GAAP.

source: Microsoft via MobileSyrup

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24 Comments

1. trojan_horse

Posts: 5868; Member since: May 06, 2016

I wonder if Surface Phone will succeed enough to save MS from exiting the mobile business. 70% deline vs 9% rise? Surface isn't savingg good enough, yet!

2. sgodsell

Posts: 7225; Member since: Mar 16, 2013

How would a Surface Phone help? You still need the apps. For instance this new Pokemon Go app is only for iOS and Android. Not Windows 10. Windows has a major problem with mobile, period. Also the apps that WP does have are mostly Arm based and not x86. So you would need to have a Surface phone that once again supports Arm processors. Microsoft has the chicken and egg problem when it comes to apps. Plus their Universal apps ecosystem hasn't been growing as fast as Microsoft would like, or customers need.

7. zigma

Posts: 11; Member since: May 30, 2014

Pokemon go really?, wow, did you ever try Windows Phone?, I know lack of apps but is a really good OS, they have the money and the best OS for PC in the world is not too late, Note S7 vs iPhone 7 is the real battle.

11. catze86

Posts: 731; Member since: Dec 07, 2015

You like it or not. WP killed by Pokemon.

21. newuser1

Posts: 276; Member since: Dec 10, 2010

is gaming really important for phones? or people buy phones only for gaming?

9. Papa_Ji

Posts: 839; Member since: Jun 27, 2016

UWAs are the future..... One App that runs on all devices...PC , hybrids ,tablet , TV , Smartphone , smart watch , gaming console vehicles ..... No more different App for every device like Apple....... iPhone & iPad (iOS) , computer (macOS) , watch (wachOS) , TV (tvOS) , CarPlay... Developers will also prefer UWAs. Microsoft is also forcing than through PC , tablet & hybrids.

16. EcoCare

Posts: 444; Member since: Jul 30, 2014

Yet Windows Store apps on PC are still lacking as well. Microsoft is way too late to catch up, even HTC's 10 can't restore former HTC's glory.

19. krystian

Posts: 423; Member since: Mar 16, 2016

I think that's part of why MS has retrenched. The ecosystem. They are focusing on desktop UWP apps. Which is kind of funny because even though market share has been falling, more and more apps are coming to mobile because of the Desktop. They are also working on making windows 10 the best developer environment which is part of why they are including linux functionality in the anniversary update, better tools for being able to develop for all platforms. I think that focusing on this is probably the smartest method. It could lead to a future where apps are released at the same time on all platforms. Making life easier for the developers is an admirable goal. Whether they can pull it off is something that will play out. They are also a confusing company. An engineer stated they are going to be working on seeing if they can get Pokemon Go on the platform. Yet they ignore this platform with their own apps that they release on ios/android. The public perception is that they don't care about their mobile and as a result windows fans are leaving. Even if they are working on something great for 2017, they should maintain a level of commitment. It's easier to fix an injured man then to bring him back to life. They would have to wow the world when they finally release their mythical device. But they are competing directly with Samsung and Apple who are no strangers to this business. Samsung may be outing foldable devices that same year.

8. MrElectrifyer

Posts: 3960; Member since: Oct 21, 2014

"70% deline vs 9% rise? Surface isn't savingg good enough, yet!" You do realize that's two different product categories, right?

3. jroc74

Posts: 6023; Member since: Dec 30, 2010

This and XBO sales have been a disappointment for MS. I wouldnt be surprised to see a major shake up with the company in the next few years.

4. arsenaljimenez

Posts: 198; Member since: May 03, 2012

Well what do you really expect? They haven't put out almost any new phones...

5. Doakie

Posts: 2478; Member since: May 06, 2009

No one else noticed the title that says Smartpohone?

6. xq10xa

Posts: 808; Member since: Dec 07, 2010

Microsoft made Windows Phone feel like a Zune. Zune was cool....back in like 2010. Seems they got stuck in time. You could have been beautiful Windows Phone...So beautiful. That's what happens when you hire dudes like Joe Belfoire. You can just tell from their presentations. THey feel so........Xbox Onesy.

10. MrElectrifyer

Posts: 3960; Member since: Oct 21, 2014

Good for them, very well deserved. Microsoft isn't putting enough effort in making Windows Phone worthwhile. IMO, it's a stupidly compromising experience at the moment, so much so, that features that even severely limited platforms like iOS had years ago, are just making their way to Windows Mobile. Despite that, Microsoft is just proudly laying off employees instead of putting them to use in fixing the loads of bugs and limitations in its platform. When they finally wake up and get off their asses, we'll have another Surface moment.

15. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Microsoft is still making billions of dollars. They don't need WP to be successfully. Only WP fans are suffering people like Bernoulli which still actively troll other people because we have chosen to put money on the winning platforms. Hard to sympathize with such trolls.

20. krystian

Posts: 423; Member since: Mar 16, 2016

It's sort of funny. A lot of features they had before android/ios. But when they decided to build w10m from scratch, all those features were taken out. They are just adding them back in now so it looks like they never had them. I mean they had living images for years and then ios makes it seem like this crazy new feature they developed. Consider the camera app just got panorama back the other day. Users has a full fledged amazing lumia camera app that MS just took down and discontinued to build their own. The quality of the app was far superior. They are only just catching up. All these features that were amazing are slowly coming back. MS also doesn't do justice to their Start screen interface. People have a miscoception of what it looks like and that it's stuck looking like that. They would need to get some artists involved and make some cool ads about how unique it can be. You can completely remove the tiles and have icons. You can add transparent images of any kind. It is fully customizable. This is my start and the actual super heroes are not part of the background they are images I have put on the start. http://i.imgur.com/zXAAzDJ.png

12. catze86

Posts: 731; Member since: Dec 07, 2015

Windows Phones received very hard punch from Pokemon.

13. IT-Engineer

Posts: 535; Member since: Feb 26, 2015

What's needed is for Microsoft to kiss and make up with Google so they can allow windows phones access to play store. And Universal Windows Apps will be a step forward. Besides it is easier than ever now to write cross platform apps using Xamarin C#. What's missing is a good advertisement campaign here in Europe to get things going.

14. xfire99

Posts: 1205; Member since: Mar 14, 2012

R.I.P Windows Phone.

17. Darkkracker

Posts: 255; Member since: Jun 11, 2016

It's time for the death panel to pull the plug on this ole lady. Rip windows phone. No Android apps= no success. Hell even that probably can't save them.look at bb

18. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

Windows smart phones are not dead yet. Some Microsoft OEM partners have some interesting ones out for sail that can use the Continuum feature. Microsoft"s CEO once said that Microsoft would make Windows smart phones even if they had to make them by themselves because they complete the Windows experience on Devices. I think Microsoft should continue to sell the MS 650 and the MS 950 at a lower price of 400 $ because they have to have some presence in the general public smart phone market because to sell windows Surface smart phones just to the Enterprise, businesses and die hard Windows smart phone fans means super low smart phone sales for Windows smart phones. they would still be around and the best smart phones to use with Windows 10 Computers of various kinds. Microsoft never properly advertised Windows smart phones in the first place to market them only as a business smart phone will be BAD BECAUSE WHO WOULD KNOW THEY EXIST. Who goes to a business section of a place that sells smart phones. Cell phone stores generally do not have a business smart phone section.

22. newuser1

Posts: 276; Member since: Dec 10, 2010

Most people putting bad comments on Windows phone out there have never used windows phone, never experience what the system like. then drag down the market share. People complain about lack of app. but how many app do you use regularly on your phone? how many apps do you install on the tiny screen phone end up scroll down the screen forever to find a single app? and lots of people complain about lack of games. people buy phones only for gaming? how long the battery on the tiny screen phone last for gaming?

23. rkoforever90

Posts: 436; Member since: Dec 03, 2011

microsoft themself dont want anyone to buy windowsphone then why should someone bother,

24. cdgoin

Posts: 614; Member since: Jul 28, 2010

Look who is coming out with new ones.. PC Companies.. not phone. Leveno, HP, etc.. MS has given up on the regular market.. WP Will now be a niche product for enterprise companies that want to have everything from Servers to Phones under the same IT umbrella. They don't HAVE to make money on them.. they just will ahve them as part of packages like HP is doing. The security of WP is MUCH better than anything but Blackberry and they even went Android. So for Security and specialized apps, it will be perfect. ( Lack of apps like PokeMon GO is a good GOOD thing for Enterprise ) MAYBE one of these years they will get the phones on Intel Chips and then be able to run x86 and x64 software natively.. THEN people might get it.

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