Daily Tech Snippet: Wednesday, July 20

• Microsoft Earnings Are Up, Cushioned by Its Cloud Business: On Tuesday, in its quarterly earnings results, Microsoft offered strong signs that its cloud business was growing quickly. Revenue from Azure, a business Microsoft started to compete in cloud computing with Amazon, the market leader, rose more than 100 percent in the quarter. Revenue from Office 365, a subscription version of the old Office software, rose 54 percent from commercial customers and 19 percent from consumers.Microsoft’s chief executive, Satya Nadella, has made cloud computing a priority for the company since becoming chief executive two years ago. Many believed it was a move that Microsoft had long needed to make but was held back by the reluctance of its previous boss, Steven A. Ballmer. There is risk in this transition. The profit margins from renting software in the cloud are not as high as selling a license to customers, and Microsoft investors have always counted on the company to generate exceptional profits. But the cloud business model tends to be more stable — a trade-off for slimmer margins. After Microsoft’s misadventures in the smartphone market, it is a necessary trade-off. Last week, the company said it would fail to meet a goal of getting its Windows 10 operating system running on one billion devices before June 2018, largely because of its retrenchment in the mobile phone business.Now the company has laid off most of the thousands of people who joined Microsoft through the deal, written off the value of nearly all of the acquisition and whittled back the number of smartphones it sells. On Tuesday, Microsoft said that its phone revenue had declined 71 percent from a year ago. For years, people have put off purchases of new machines or avoided them entirely in favor of smartphones and tablets. Last week, IDC, the technology research firm, said worldwide PC shipments fell 4.5 percent in the most recent quarter compared with a year earlier.For the quarter ended June 30, Microsoft reported net income of $3.12 billion, or 39 cents a share, compared with a loss of $3.2 billion, or 40 cents a share, during the same period a year earlier. Revenue fell to $20.61 billion, from $22.18 billion a year ago. The decline was partly the result of a $2 billion deferral of revenue related to Windows 10, its latest operating system. Accounting rules require Microsoft to recognize revenue from the software to be recognized in pieces over time. Without the deferral, Microsoft’s revenue rose 2 percent from a year earlier to $22.64 billion. The company’s shares jumped about 4 percent in after-hours trading following the release of its results.

• Google has found a business model for its most advanced artificial intelligence: Two years ago, Google spent over half a billion dollars for the tiny artificial intelligence startup DeepMind. Since then, the unit has walloped Atari video games and beaten an impossible board game. Impressive stuff, that. But those AI demonstrations have yet to spell actual revenue. Until now — although the efforts are helping Google save money on its most expensive part. DeepMind chief Demis Hassabis told Bloomberg that his unit recently began applying its advanced AI to Google’s data centers, finding ways to reduce the company’s sizable energy bill. Google started using machine learning for its data centers two years ago, searching for ways to reduce costs for one of the company’s top expenses. A month ago, it aimed the more specialized AI tools from DeepMind at the problem of cooling these server farms. That cut the energy needed for cooling by 40 percent, the company said. It didn’t offer a dollar figure for that, but it’s safe to assume that it means hundreds of millions in savings over the long haul.DeepMind technically sits outside of Google in Alphabet. (I’ve heard people describe it as in the “Alphaverse,” whatever that means.) But a rep said that Google was not paying DeepMind for its cost-cutting research here.

• Facebook Pilots Offline Video for India in Duel With YouTube: Facebook Inc. is piloting a feature in India allowing users to save videos to watch offline, chasing a similar program from Google’s YouTube, as the companies attempt to crack a market ridden with poor internet connectivity. The move followed feedback from users in the country citing poor video experiences because of limited mobile coverage, Facebook said in a statement. “We’re testing an option for people to download videos to Facebook while they’re online on good internet connections, to view the video at anytime, online or offline, without using extra mobile data,” the company said. YouTube introduced offline video in 2014 to cater to Indians crazy about watching Bollywood song sequences, cricket snippets and comedy sketches. Despite the cost of downloads, an estimated 40 percent of data consumption on phone networks is video, said Nikhil Pahwa, editor of the New Delhi-based Medianama.com, which monitors news on the digital industry.Facebook, which has 142 million users in India, said the new feature helps users get through the lag between downloading and playing a video by saving it for later, similar to the YouTube feature. Only original videos posted on personal Facebook accounts and on the social network’s pages can be downloaded. The program is being tested on a small percentage of Indian users, the company said without providing details on broader rollout.