Analysis: Microsoft’s FY24 Q4 (Premium)

Microsoft just completed the first full fiscal year of the AI era, and while the real-world impact of AI remains elusive, most of the company is firing on all cylinders. There are, of course, two exceptions, and both are tied to consumer hardware: Surface and Xbox continue to hemorrhage revenues at an alarming and unsustainable rate.

So let's dive in. Here's a more detailed look at the quarter, focusing as always on the consumer businesses that we care about the most here on Thurrott.com.
The raw numbers
Overall earnings: A net income of $22 billion (up 10 percent year-over-year) on revenues of $64.7 billion (up 15 percent) for the quarter, and a net income of $88.1 billion (up 22 percent) on revenues of $245.1 billion (up 16 percent)

Intelligent Cloud:

Key businesses: Azure, Windows Server
$28.5 billion in revenues, up 19 percent YOY

Productivity and Business Processes:

Key businesses: Microsoft 365 commercial
$20.3 billion in revenues, up 11 percent YOY

More Personal Computing:

Key businesses: Windows, Xbox/Gaming
$15.9 billion in revenues, up 14 percent YOY

Windows
Windows has been the focus of my professional life for 30 years, so it's been troubling watching over time as Microsoft shifted from being Windows-centric to almost completely sidelining the product. Today, Windows is important, of course, it generates over $10 billion in revenues every quarter, fairly consistently. But it's also not the focus, which you can see clearly in the shabby ways in which Microsoft enshittifies Windows 11 today.

More relevant to this analysis, Windows is yesterday from a financial perspective, a legacy product that is best mentioned only infrequently, lest Wall Street by reminded how much it still contributes. But it's the foundation of Microsoft's More Personal Computing business, the smallest of Microsoft's three top-level businesses. And we did get some numbers, and a bit of context.

Windows barely factored into Microsoft's post-earnings conference call: It was mentioned only 8 times, with the company's executives noting that the PC market was "as expected," with revenue growth from PC makers (OEMs) up just 4 percent in the quarter.

Microsoft has never provided hard Windows 11 usage or market share numbers, as it did in the early years of Windows 10. But it did claim that "Windows 11 active devices"—usage share—was up 50 percent YOY, suggesting that it's finally making some inroads on its predecessor. We don't have a great third-party source for this, but StatCounter claims that Windows 11 represents 29.75 percent of the installed base today, compared to 66 percent for Windows 10. A year ago, Windows 11 was 24 percent, while Windows 10 was 71 percent. Is that a 50 percent YOY gain? No: If you assume the market size hasn't changed, that's a gain of less than 17 percent. But Windows 10 usage only dropped by 7 percent and … I don't know. These numbers aren't accurate, so it's impossible to verify...