Tensions are flying high in the world of tech this week as rival industry giants, Apple and Microsoft both release their latest quarterly reports and it seems there is a clear leader. While Apple celebrates the recent UK launch of its mobile payment service and an impressive increase in revenue, Microsoft is forced to admit defeat in the mobile market and a reveals its biggest ever net loss.
Both Apple and Microsoft have set unprecedented records this quarter but this is a cause for jubilation for only one of the leading tech firms. Over at HQ, Apple is celebrating a 38% rise in profits to $10.7bn (£6.87bn) and a revenue hike of 33% to $49.6bn, which is a record high for the third quarter of a financial year for the company. However, sat in the big apple-shaped shadow that has been cast following this revelation is Microsoft, which has reported a multi-billion dollar net loss worth £2.1bn – the largest ever for the company.
The $3.2bn net loss came following the $7.5bn writedown of the mobile device division that Microsoft bought from Nokia back in April 2014. The company was burdened with $8.4bn in charges and layoffs through the mobile operation, which included a $7.5bn charge related to the restructuring of its Nokia handset business.
These figures have come as shocking plot twist after Microsoft reported a healthy $4.6bn net income for the same period last year. Where the company usually shows strengths in its corporate-software arm, there were weaknesses and in areas such as consumer-technology which usually lag behind, there were notable peaks.
While demand for iPhones sky-rockets by 35% and Mac computer sales climb to 4.8 million compared to the same time last year, Microsoft admits a substantial decrease in consumer demand for its once-popular Windows operating system. Sales of Windows to computer manufacturers fell by 22% in the quarter and echoes the lacklustre customer response to the recent Windows 8 update.
These figures really haven’t emerged at a very good time as Microsoft prepares to launch its latest Windows 10 update on July 29th. For the first time in the company’s history, existing customers who already own a Microsoft computer will be able to run the update free of charge. Bosses are hoping (and praying) that sales of additional services such as PC videogames, Office and web-search add-ons will boost lost revenue but Microsoft has been unsuccessful in selling add-ons to PC users in the past.
While Apple is forecasting revenues to be between $49bn and $51bn by next quarter, Microsoft are planning a job cull in its phone hardware business. The company is expected to cut around 7,800 jobs in the division, which is no doubt a direct impact of the dramatic net loss. This follows an announcement made last month that revealed Microsoft chief executive, Satya Nadella would be eliminating four of the company’s senior positions. The departures include former Nokia chief executive Stephen Elsop and are part of a wider plan to boost productivity and rethink the company’s leadership model.
