The "Other" category of Devices & Consumer saw its revenue fall as well, from $2 billion to $1.8 billion. This category includes sales of online ads in Microsoft's websites and sales of Office 365 Home Premium, the subscription-based version of Office for consumers. Search ad revenue grew 34 percent, and overall online ad revenue was up 6 percent.
There are now more than 3.5 million Office 365 Home Premium subscribers, Microsoft said.
Overall, the Devices & Consumer revenue grew 13 percent to $11.91 billion.
Meanwhile, Commercial revenue grew 10 percent to $12.67 billion, helped by strong software licensing sales growth of SQL Server, System Center and of enterprise cloud computing products, like Office 365, Azure services and Dynamics CRM Online.
System Center and SQL Server sales each grew by double digits, and revenue from Windows licenses sold in volume to enterprises grew 10 percent.
Commercial cloud services revenue, which includes Office 365, Dynamics CRM Online and Azure, was up 107 percent.
Microsoft's overall gross margin for the quarter was flat at $16.2 billion.
Unearned revenue grew 12 percent to $19.5 billion and revenue contracted but not yet billed was also up 12 percent to more than $23 billion. "To me, this is important, as these long-term commitments demonstrate the confidence that customers have in our product roadmap," Hood said.
The company didn't provide any updates on its search for a new CEO. Steve Ballmer announced about five months ago his intention to retire before the end of August. Hood said the acquisition of Nokia's smartphone business is on schedule to close in the current quarter. No update was provided on the status of the reorganization Ballmer unveiled in July that seeks to make Microsoft a more cohesive company where business units collaborate more tightly.
There was also no talk about whether Windows 8.1 will be followed by another point update or by a revamped new version. Also not addressed was the topic of whether Windows Phone and Windows RT will be merged in the future to a single mobile OS.
Microsoft's stock was up 3.5 percent to $37.32 in after-hours trading in the early evening.
Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.