Microsoft 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Xbox One led December

“According to NPD Group figures, Xbox One was the leading console in the U.S. for the month of December, which was its first full month in market. When adding in Xbox 360, which held the third spot, Xbox led the U.S. market, with 46% share in December.”

PC Better than expected

“let me share some perspective on what we saw in the PC market, which was slightly better than our expectations. Business PCs grew again, for the third consecutive quarter, and benefited from an improving macro-environment, better availability of innovative new hardware, and a refresh cycle ahead of Windows XP end of support.”

Consumer PC remains soft though

“growth was higher in large enterprises than small and medium-sized businesses. Consumer PCs, while better than our expectations, continued to be soft, as they face challenges from competing form factors. And, as a general theme, developed markets outperformed emerging markets.”

Nokia expected to close this quarter

“on Nokia. We continue to expect that the deal will close this quarter, but are still in the process of securing all regulatory approvals and meeting closing conditions. So all guidance provided here assumes no impact from Nokia.”

Reasons for better business PC spend

“The overall macro spending environment is better. It’s a little better than we thought, and in businesses we’re seeing it, you’re seeing it in some of the IT spend forecasts you all put out. They’re being raised, and I think that has an impact.

The second is I think our partners have done a very good job expanding the types and availability of new and interesting hardware. That brings people to the store, and I think it’s an encouraging sign. And finally, as you asked, is the end of life of XP.”

Q: Why haven’t you talked about windows phone? A:

“It’s a good point. We didn’t have a chance to discuss the phone results. We did see growth in Windows Phone, both in the licensing and in the mobile phone IP revenues. Both grew this quarter. And we continue to see the growth in many of the places we’ve seen historically, so unsubsidized markets, as well as with entry level smartphone devices.”

Q: Why is the surface still losing money on 900m in revenue? A:

“You know, when we launched Surface just a year ago, our goal was really to create a product that showcased what can happen when you innovate in hardware, in the service, and in the software. And as you know, we’ve learned a lot over the course of this journey. And we have to make more meaningful progress”