Microsoft


Microsoft Details Next Windows Phone Update With Folders, Expanded Cortana, and More

Microsoft Details Next Windows Phone Update With Folders, Expanded Cortana, and More

It hasn’t been long since Microsoft began their rollout of the Windows Phone 8.1 update but they are already giving details of the next update which is slated to roll out in the coming months. The update isn’t as significant as Windows Phone 8.1 was, but it still brings some good improvements to the platform. Cortana has been improved and is being rolled out to new countries with localization to make it more usable for different people in different parts of the world. Folders have been implemented in a clever way as well, and there are a whole bunch of other additions throughout the OS. We’ve detailed some of the bigger changes below, starting with Cortana.

Microsoft’s virtual assistant, Cortana, is making its way to several different countries with this new update. Microsoft has put some focus on bringing the feature to the Chinese market with more localized information that would be relevant to someone living in China. The Chinese version of Cortana supports Mandarin Chinese for voice, text, and speech, but Microsoft is also including special features like an alternate form with a different appearance, different animations, and different sounds. Cortana in China also provides information like air quality on weather cards, information about driving restrictions, and the ability to track local TV shows and celebrities, all of which are features Microsoft hopes will make Cortana more useful to users in China.

Microsoft has done the same sort of thing for the new UK version, with a British accent and British English spelling in Cortana. Locally relevant info like info from the London Stock Exchange and local sport statistics are also included. 

With the new update Cortana will also be rolling out to Canada, India, and Australia as an alpha. Users will have to choose between using Cortana with the US or UK English language model as Microsoft is not finished with any localization in those regions.

The big feature addition of this update is one that users have been asking for since the days of Windows Phone 7. Folders are coming to Windows Phone and Microsoft’s implementation is clever by not destroying the functionality of live tiles within a folder. The folder takes up a dynamic amount of space on the home screen and the space is made up of all the live tiles within that folder along with a folder name running along the bottom. The user can make certain apps appear bigger or smaller depending on their importance and arrange them however they like. When tapped the folder expands to show all the tiles at their normal size.

Beyond that there are various improvements to parts of the OS. The Windows Phone Store now has a live tile that updates to show new apps and games that have been added to the store, the SMS app gains the ability to select multiple messages for forwarding or deletion, and there’s a new apps corner section in the settings app which allows the user to set up a mode with restrictions to what apps can be used. Microsoft is hoping the apps corner feature will make it easier to deploy Windows Phone devices in business scenarios where only a few apps needs to be accessed like for barcode scanning and inventory management at a distribution center.

The last thing Microsoft detailed are improvements to privacy and security features.The new update to Windows Phone will include VPN support to better keep information secure when connecting to wireless networks like public hotspots where the user doesn’t want to expose themselves to other users that may be on the network.

Microsoft’s time frame for when the update will be released is just described as “in the coming months.” For users running the Windows Phone 8.1 developer preview, the preview of this latest update will begin to roll out next week.

Microsoft Details Next Windows Phone Update With Folders, Expanded Cortana, and More

Microsoft Details Next Windows Phone Update With Folders, Expanded Cortana, and More

It hasn’t been long since Microsoft began their rollout of the Windows Phone 8.1 update but they are already giving details of the next update which is slated to roll out in the coming months. The update isn’t as significant as Windows Phone 8.1 was, but it still brings some good improvements to the platform. Cortana has been improved and is being rolled out to new countries with localization to make it more usable for different people in different parts of the world. Folders have been implemented in a clever way as well, and there are a whole bunch of other additions throughout the OS. We’ve detailed some of the bigger changes below, starting with Cortana.

Microsoft’s virtual assistant, Cortana, is making its way to several different countries with this new update. Microsoft has put some focus on bringing the feature to the Chinese market with more localized information that would be relevant to someone living in China. The Chinese version of Cortana supports Mandarin Chinese for voice, text, and speech, but Microsoft is also including special features like an alternate form with a different appearance, different animations, and different sounds. Cortana in China also provides information like air quality on weather cards, information about driving restrictions, and the ability to track local TV shows and celebrities, all of which are features Microsoft hopes will make Cortana more useful to users in China.

Microsoft has done the same sort of thing for the new UK version, with a British accent and British English spelling in Cortana. Locally relevant info like info from the London Stock Exchange and local sport statistics are also included. 

With the new update Cortana will also be rolling out to Canada, India, and Australia as an alpha. Users will have to choose between using Cortana with the US or UK English language model as Microsoft is not finished with any localization in those regions.

The big feature addition of this update is one that users have been asking for since the days of Windows Phone 7. Folders are coming to Windows Phone and Microsoft’s implementation is clever by not destroying the functionality of live tiles within a folder. The folder takes up a dynamic amount of space on the home screen and the space is made up of all the live tiles within that folder along with a folder name running along the bottom. The user can make certain apps appear bigger or smaller depending on their importance and arrange them however they like. When tapped the folder expands to show all the tiles at their normal size.

Beyond that there are various improvements to parts of the OS. The Windows Phone Store now has a live tile that updates to show new apps and games that have been added to the store, the SMS app gains the ability to select multiple messages for forwarding or deletion, and there’s a new apps corner section in the settings app which allows the user to set up a mode with restrictions to what apps can be used. Microsoft is hoping the apps corner feature will make it easier to deploy Windows Phone devices in business scenarios where only a few apps needs to be accessed like for barcode scanning and inventory management at a distribution center.

The last thing Microsoft detailed are improvements to privacy and security features.The new update to Windows Phone will include VPN support to better keep information secure when connecting to wireless networks like public hotspots where the user doesn’t want to expose themselves to other users that may be on the network.

Microsoft’s time frame for when the update will be released is just described as “in the coming months.” For users running the Windows Phone 8.1 developer preview, the preview of this latest update will begin to roll out next week.

Microsoft Q4 FY 2014 Financial Results

Microsoft Q4 FY 2014 Financial Results

This afternoon Microsoft held an earnings call to announce the results of their fourth quarter for fiscal year 2014.

Strong growth in Microsoft’s cloud offerings offset a loss by the recently acquired Nokia Devices and Services to contribute to an overall GAAP revenue of $23.4B, up 18% from Q4 2013, and up 15% from Q3 2014. Gross Margin came in at $15.8B which is 67.5%, with an operating income of $6.5B and net income of $4.6B for the quarter. Operating income was up over Q4 2014, but net income was down due to an additional $785M set aside for income taxes. Diluted earnings per share was $0.55, which missed analysts’ expectations of $0.60. For the quarter, $3.4B was returned to shareholders which was a 17% increase from last year.

Microsoft Q4 2014 Financial Results (GAAP)
  Q4’2014 Q3’2014 Q4’2013
Revenue (in Billions USD) $23.382 $20.403 $19.896
Operating Income (in Billions USD) $6.482 $6.974 $6.073
Gross Margin (in Billions USD) $15.787 $14.462 $14.294
Net Income (in Billions USD) $4.612 $5.660 $4.965
Margins 67.5% 70.8% 71.8%
Earnings per Share (in USD) $0.55 $0.68 $0.59

The Devices and Consumer lines came in with good results for the quarter, with the caveat that Q4 2013 included the $900M write down of Surface RT inventory which skews the results somewhat.

Devices and Consumer Licensing contributed $4.7B to the overall revenues and $4.4B to Gross Margin with both values being higher both sequentially and year-over-year. Windows OEM revenue was up 3% with a split of an 11% increase in Pro revenue combined with non-Pro revenue being down 9%. The non-Pro decrease can likely be at least somewhat attributed to offering Windows free for certain devices now. Office Consumer revenue was up 21% compared to Q4 2013, and Windows Phone revenue was up 95% due to no longer having to pay for the commercial agreement with Nokia.

As for consumer hardware, revenue was up 23% from Q4 2013 at $1.44B but down from the $1.97B last quarter, and Gross Margins increased 103% year-over-year to $0.02B which is also down from $0.26B last quarter. The large increase in Gross Margin is attributed to the Surface RT right off last fiscal year and Microsoft also took a hit for not shipping a new form factor this quarter which is likely the rumored Surface Mini, which didn’t ship as expected with the Surface Pro 3. Overall Surface revenue was $409 million for the quarter. Xbox sold 1.1 million consoles this quarter, and had a 14% increase in revenue driven by increased console revenue. The new segment to Devices and Consumer hardware is the Phone Hardware, which contributed $1.99 billion in revenue but the new Nokia division came in at a $692M loss. Microsoft reported sales of 5.8 million Lumia Smartphones, and 30.3 million other phones.

The final piece of the consumer division is D&C Other, which includes Office 365 Consumer, Resale, Windows Store, Xbox Live, Bing, and a few other offerings. Revenue for this segment was up $20% year-over-year at $1.88B, but down from the $1.95B in Q3. Gross Margins were also up 21% from last fiscal at $0.45B. Microsoft added an additional 1 million new subscribers to Office 365 Home and Personal, which now totals 5.6 million subscribers. Bing advertising revenue was up 40% due to higher revenue per search, higher search volume, and an expiration of payments to Yahoo from last year. Bing search share is now at 19.2% in the US, up 130 basis points from the same time a year ago.

The commercial side is where Microsoft makes the majority of its revenue, and this quarter is no different with overall revenue coming in at $13.48B for the quarter which is an increase of 11% year-over-year. Gross Margin was also up 10% at $10.99B for the quarter. Commercial is broken down into Commercial Licensing and Commercial Other, with the former being up 6% to $11.22B in revenue and the latter up 44% to $2.26B. Commercial Licensing includes revenue for on premise offerings such as Server 2012, SQL Server, and System Center, while the Other segment is for cloud offerings and services which grey 147% from the same period last year.

Microsoft Q4 2014 Segment Overview (in Billions USD)
  Q4’2014 Q3’2014 Q4’2013 Percentage for quarter
D&C Licensing Revenue $4.69 $4.38 $4.29 20.1%
D&C Licensing Gross Margin $4.41 $3.91 $3.88 27.9%
D&C Hardware Revenue $1.44 $1.97 $1.17 6.2%
D&C Hardware Gross Margin $0.02 $0.26 -$0.65 0.1%
D&C Other Revenue $1.88 $1.95 $1.56 8.0%
D&C Other Gross Margin $0.45 $0.54 $0.37 2.9%
Phone Hardware Revenue $1.99 NA NA 8.5%
Phone Hardware Gross Margin $0.054 NA NA 0.3%
Commercial Licensing Revenue $11.22 $10.32 $10.58 48.0%
Commercial Other Revenue $2.26 $1.90 $1.57 9.7%
Commercial Gross Margin $10.99 $9.91 $10.00 69.6%

So what can we learn from this quarter? Clearly Microsoft is well positioned going forward to continue its play in the enterprise, with cloud services in particular being a strong point. No other cloud provider has the product offerings which can compete for the hybrid cloud model of on premise servers running alongside cloud offerings, and they are leveraging this strength to make substantial gains in this sector. As for the consumer offerings, we now see why such drastic action was taken last week with the downsizing of the Nokia division in particular, which lost almost $700 million this quarter. A lot of the job cuts were aimed at manufacturing, and those will likely be aimed towards locations that created the non-Lumia smartphones. Earnings for the quarter were right in line or slightly over the projected results provided last quarter, assuming the Nokia earnings and loss are excluded because they were not a part of Microsoft when the projections were made. Microsoft as a company has traditionally been used to the high margin software business, and the recent push to be a hardware manufacturer has shown that this is a low margin, high risk playground with all of the major losses being in hardware. With a new CEO at the helm for the full FY 2015, we’ll have to see what his vision and patience are for the hardware segment.

Microsoft Announces Significant Cuts to Workforce

Microsoft Announces Significant Cuts to Workforce

Recently appointed CEO Satya Nadella announced the largest layoffs in Microsoft’s 39 year history today, with a staggering 18,000 jobs on the chopping block. The goal, according to Nadella is to “simplify the way we work to drive greater accountability, become more agile and move faster” signifying Nadella’s goal to bring some focus to Microsoft’s portfolio of services while also seemingly looking to play down the job losses.

The last large round of layoffs at Microsoft came in 2009, after the stock market crash. That round of layoffs was the previous largest ever at 5,800 positions, and today’s announcement dwarfs that number substantially. But not all departments will share this burden evenly, with the recently acquired Nokia employees getting the brunt of the cuts. In April, Microsoft closed the acquisition of the Nokia mobile phone business, and in the process added 25,000 employees to its payroll. Nadella announced today that 50% of those employees will be let go. Some will be factory workers from some of the in-house manufacturing Nokia owned, and the remainder will be from the handset business itself.

The remaining 5,500 employees to be laid off will therefore come from within Microsoft itself, as it attempts to concentrate on some of its more successful offerings. Excluding the Nokia losses, which are often expected after a merger of this sort, the total number of Microsoft employees being affected is not significantly different than the 2009 cuts.

Former Nokia CEO, now Microsoft Executive VP of Devices and Services, Stephen Elop laid out some of the upcoming changes in his own letter to his employees. Elop promises a focus on Windows Phone, with a near term goal of driving up Windows Phone volume by focusing on the affordable smartphone segments. With that announcement comes the death of the strange Nokia X series of AOSP phones, which debuted at MWC 2014 and were updated with a new model only a couple of weeks ago. While I would make the argument that there was little need for the X series at all, it is doubly frustrating to anyone who bought into the platform to find it killed off so quickly. The X series would be easy prey for cuts like these, because it didn’t really offer anything new to Android or to Microsoft. While it promised to be low cost, retail pricing for the X line was often more than the low cost Lumia phones. The X series had no place in a Microsoft owned Nokia, and should have been killed a while ago.

Elop also announced that they would continue to work on the high end phone range as well. Historically Windows Phone has suffered selling flagship models for many reasons, but it appears that they are not ready to give up the fight in this market yet. He also specifically called out Surface, Perceptive Pixel, and Xbox as new areas of innovation, which likely means those brands are safe for the time being.

The remainder of the Nokia feature phone lines appear to be immediately canceled. This is a segment that has been rapidly shrinking in recent years, with the consumer push towards smartphones, so this is likely a good strategic move by Microsoft. The work done on Windows Phone to allow it to work well on low cost hardware is also likely another big reason for this.

Another major announcement was the closure of the Xbox Entertainment Studios which had a goal of providing original content for Xbox Live members. Several projects such as “Signal to Noise” and “Halo: Nightfall” that were mid production will be completed, but after that content is delivered the studio will be closed.

The full ramifications of these job cuts won’t be known for some time, but it seems fair to say that Nadella wants to put his own stamp on the company. Removing the Nokia X line, the Asha and S40 lines, and an entertainment studio seem like reasonable things to cut if you want to focus your company. Nadella speaks about flattening the organization out, which should help them be quicker to execute on ideas. These kinds of steps, though painful for the employees, can be better for the company in the long run. For quite some time, the perception is that Microsoft is not agile enough to respond to new markets, and it appears that Satya Nadella is trying to focus his company on its strength and that should have a net positive for the company. Microsoft’s next earnings call comes on July 22nd, at which point we may get more details about upcoming plans.

 

Microsoft Announces Significant Cuts to Workforce

Microsoft Announces Significant Cuts to Workforce

Recently appointed CEO Satya Nadella announced the largest layoffs in Microsoft’s 39 year history today, with a staggering 18,000 jobs on the chopping block. The goal, according to Nadella is to “simplify the way we work to drive greater accountability, become more agile and move faster” signifying Nadella’s goal to bring some focus to Microsoft’s portfolio of services while also seemingly looking to play down the job losses.

The last large round of layoffs at Microsoft came in 2009, after the stock market crash. That round of layoffs was the previous largest ever at 5,800 positions, and today’s announcement dwarfs that number substantially. But not all departments will share this burden evenly, with the recently acquired Nokia employees getting the brunt of the cuts. In April, Microsoft closed the acquisition of the Nokia mobile phone business, and in the process added 25,000 employees to its payroll. Nadella announced today that 50% of those employees will be let go. Some will be factory workers from some of the in-house manufacturing Nokia owned, and the remainder will be from the handset business itself.

The remaining 5,500 employees to be laid off will therefore come from within Microsoft itself, as it attempts to concentrate on some of its more successful offerings. Excluding the Nokia losses, which are often expected after a merger of this sort, the total number of Microsoft employees being affected is not significantly different than the 2009 cuts.

Former Nokia CEO, now Microsoft Executive VP of Devices and Services, Stephen Elop laid out some of the upcoming changes in his own letter to his employees. Elop promises a focus on Windows Phone, with a near term goal of driving up Windows Phone volume by focusing on the affordable smartphone segments. With that announcement comes the death of the strange Nokia X series of AOSP phones, which debuted at MWC 2014 and were updated with a new model only a couple of weeks ago. While I would make the argument that there was little need for the X series at all, it is doubly frustrating to anyone who bought into the platform to find it killed off so quickly. The X series would be easy prey for cuts like these, because it didn’t really offer anything new to Android or to Microsoft. While it promised to be low cost, retail pricing for the X line was often more than the low cost Lumia phones. The X series had no place in a Microsoft owned Nokia, and should have been killed a while ago.

Elop also announced that they would continue to work on the high end phone range as well. Historically Windows Phone has suffered selling flagship models for many reasons, but it appears that they are not ready to give up the fight in this market yet. He also specifically called out Surface, Perceptive Pixel, and Xbox as new areas of innovation, which likely means those brands are safe for the time being.

The remainder of the Nokia feature phone lines appear to be immediately canceled. This is a segment that has been rapidly shrinking in recent years, with the consumer push towards smartphones, so this is likely a good strategic move by Microsoft. The work done on Windows Phone to allow it to work well on low cost hardware is also likely another big reason for this.

Another major announcement was the closure of the Xbox Entertainment Studios which had a goal of providing original content for Xbox Live members. Several projects such as “Signal to Noise” and “Halo: Nightfall” that were mid production will be completed, but after that content is delivered the studio will be closed.

The full ramifications of these job cuts won’t be known for some time, but it seems fair to say that Nadella wants to put his own stamp on the company. Removing the Nokia X line, the Asha and S40 lines, and an entertainment studio seem like reasonable things to cut if you want to focus your company. Nadella speaks about flattening the organization out, which should help them be quicker to execute on ideas. These kinds of steps, though painful for the employees, can be better for the company in the long run. For quite some time, the perception is that Microsoft is not agile enough to respond to new markets, and it appears that Satya Nadella is trying to focus his company on its strength and that should have a net positive for the company. Microsoft’s next earnings call comes on July 22nd, at which point we may get more details about upcoming plans.