Microsoft today announced new operating segments for its quarterly financial reporting.
Operating segments are the domain of Wall Street analysts, and it’s not unusual for public companies to rearrange their structure for financial filings, but today’s news is the latest example of chief executive Satya Nadella exerting influence on the company.
A press release lists the three new segments and details what each contains (emphasis mine):
The Productivity and Business Processes segment includes results from Office and Office 365 for commercial and consumer customers, as well as Dynamics and Dynamics CRM Online.
The Intelligent Cloud segment includes results from public, private and hybrid server products and services such as Windows Server, SQL Server, System Center, Azure, and Enterprise Services.
The More Personal Computing segment includes results from licensing of the Windows operating system, devices such as Surface and phones, gaming including Xbox consoles, and search.
These new headers — which will be used for the first time in Microsoft’s next quarterly earnings report, coming out on Oct. 22 — are considerably simpler (albeit admittedly more vague) than the ones that have been used for the past couple of years: D&C Licensing Computing and Gaming Hardware, Phone Hardware, D&C Other, Commercial Licensing, and Commercial Other.
The new segment names come straight out of a pair of company wide emails that Nadella sent out in June — first, the one in which Stephen Elop’s retirement was announced, and second, the one where Nadella laid out a new “shared mission” for Microsoft.
In both cases, Nadella cited the company’s new “interconnected and bold ambitions,” which exactly mirror the three new operating segments:
- Reinvent productivity and business processes
- Build the intelligent cloud platform
- Create more personal computing
Today’s changes reinforce the ongoing, much debated narrative that 40-year-old Microsoft is different now. The question is whether the new focus, and the corresponding new structure for reporting financials, will have a major impact on the company in the long-term.
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