Microsoft Earnings Illustrate Move to Devices and Services From Software - NYTimes.com

A tumultuous transition time for Microsoft

"“The real growth you see is hardware,” said Brendan Barnicle, an analyst at Pacific Crest Securities. “It was the devices and consumer business driving everything in the quarter.”
 That’s the good. The bad, though, is that Microsoft’s gross profit from the hardware business actually fell to $411 million, compared with $762 million a year ago, despite the surge in sales. One of the big reasons for the fall is that profit from new consoles like the Xbox One is almost always nonexistent when the devices are introduced, but they improve as component prices fall, manufacturing becomes more efficient and the audience of game buyers expands."

Microsoft Earnings Illustrate Move to Devices and Services From Software - NYTimes.com