Microsoft Corp. reported a 14 per cent growth in revenue to US$24.51 billion in its second quarter earnings, thanks largely to sales of its Surface tablets and Xbox game consoles.

The company’s revenue for the quarter ended Dec. 31st exceeded most analysts’ estimates of $23.68 billion. Microsoft’s net income grew to $6.56 billion from $6.68 billion in the same quarter a year earlier.

Microsoft reported that it sold 7.4 million Xbox consoles in the retail channel; about 4 million of the units sold were the new Xbox One. This caused the revenue of its device and consumer hardware unit to shoot up 68 per cent, from $2.80 billion to $4.72 billion.

Sales of the Surface tablets also more than doubled from $400 million in the first quarter to $893 million in the succeeding quarter. On the other hand, according to this report in ComputerWorld U.S., the company lost $39 million on those sales as the cost of manufacturing and marketing Surface tablets exceeded revenue.

The company’s gross margins in devices and consumer hardware fell by 46 per cent due to a 111 per cent rise in cost of manufacturing to $2.3 billion.

Sales of Windows to hardware partners declined by three per cent, and revenue for devices and consumer licensing also dropped six per cent to $5.40 billion, year-over-year.

Windows OEM sales to businesses grew 12 per cent and retail sales of Windows declined 69 per cent to $264 million.

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