Microsoft has announced results for Q4 (October-December) 2014 quarter, that they treat as Q2 (second financial quarter). The results are generally positive and Microsoft reports growth in Lumia sales both QoQ and YoY to 10.5 million units, the highest for a quarter yet. Last quarter Microsoft had sold 9.3 million Lumia devices.
Phone Hardware revenue was $2.3 billion, as we sold 10.5 million Lumia phones and 39.7 million non-Lumia phones during the three months ended December 31, 2014. We acquired NDS in the fourth quarter of fiscal year 2014.
Phone Hardware gross margin was $331 million. Phone Hardware cost of revenue, including $115 million amortization of acquired intangible assets, was $2.0 billion.
While understood, Microsoft has also mentioned that this growth in sales is driven by affordable smartphones. We have reported how devices like Lumia 535 are bringing good volume in markets like India.
Non-Lumia phones volume has seen serious decline again, keeping with the general market trend of switch to smartphones.
Microsoft though has reported decline in Windows Phone revenue, because they now own the Nokia’s Phone division and thus licensing revenue has gone down.
D&C Licensing revenue decreased $1.4 billion or 25%, mainly due to a decline in Windows Phone revenue, as well as lower revenue from licenses of Windows OEM and Office Consumer. Windows Phone revenue decreased $635 million or 61%, primarily due to prior year revenue associated with joint strategic initiatives with Nokia that ended in conjunction with the acquisition of NDS.