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Gaming and Home Working See Microsoft Profits Soar

The Microsoft building in Munich, Germany
(Image credit: Rufus46 Creative Commons Attribution-Share Alike 3.0 Unported)

The popularity of its cloud computing services, as well as the small matter of its software output, sent Microsoft profits soaring in the first three months of 2021 to $14.8 billion. This represents a 38% rise over the same period in 2020 according to a Microsoft press release and the Associated Press.

The Microsoft Store in Times Square

(Image credit: LunchboxLarry Creative Commons Attribution 2.0 Generic)

The company’s total revenue in the period was $41.7 billion, of which $13 billion came from what MS refers to as ‘personal computing,’ which grew thanks to increased demand for gaming and strong PC sales, which Microsoft receives licensing revenue for. The star of the show was clearly Xbox, which contributed to a 34% increase in sales following the launch of the Series S and X consoles at the end of last year, and the rush by many gamers to secure one ready for the holiday season. Surface hardware managed a 12% increase in revenue.

It’s the cloud, however, which accounts for the largest rise of 23% to revenue of $15.1 billion as more and more individuals, companies, and even governments switch to working online. Of this, the largest growth came from Azure, which saw its revenue grow by 50%. “Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,” CEO Satya Nadella said in a statement. 

The first quarter of 2021 was unusually strong for PC sales, in part due to unfulfilled demand following the components backlog. The rise in sales across the industry was also due to a weak first quarter in 2020, as the Coronavirus pandemic disrupted Asian supply chains. As Microsoft earns licensing fees for every PC sold with Windows installed, it benefits greatly from increased sales across the industry.

  • Heat_Fan89
    I remember reading, there was a time where Bill Gates and Steve Balmer had to be convinced that entering the console space was a good idea. At the time Sony was the juggernaut and Microsoft was the new kid on the block. Now they are both on equal terms, the XBOX brand is the established cool brand amongst the younger generation.

    Xbox Live and Game Pass is beyond successful and Sony uses Azure for its Playstation Network. How times have changed and I still can't get my hands on a Playstation 5.
    Reply