Microsoft's Quarterly Earnings: Xbox and Surface Tablets Are Doing Good, Windows Weak

Microsoft revealed its quarterly earnings according to which its Devices and Consumer group's revenue grew 8 percent year over year in the last calendar quarter of 2014. However, the Windows market declined and operating income was down.

Operating income fell two percent to $7.78 billion and earnings per share dropped nine percent to $0.71. The lower operating income is being attributed in part to $243 million in expenses incurred by Microsoft's reorganization and by integration of Nokia's Devices and Services Division, Ars Technica noted.

Windows OEM revenue fell to $455 million, down 13 percent. A big part of this drop was attributed to the end of the Windows XP upgrade cycle, with the number of licenses sold reverting to levels comparable to prior to the Windows XP end-of-life.

Without revealing the shipment numbers for the Surface, Microsoft said the revenue for slate computer increased by 24 percent or $211 million versus a year earlier.

Microsoft also sold 6.6 million Xbox systems during the holidays compared to Sony's PlayStation 4s that was solid 4.1 million just during the last month of holiday shopping.

"We again saw enthusiasm and demand around our cloud offerings like Office 365, Dynamics CRM Online and Azure, as well as Surface Pro 3," said Kevin Turner, chief operating officer at Microsoft in a statement. "Our sales engagement worldwide continues to focus on helping customers and partners transition to the cloud and navigate the shifting product mix related to our services and solutions."