On February 4, 2014 Microsoft (MSFT) announced Satya Nadella would be its new Chief Executive Officer. Nadella has been an internal Microsoft employee since 1992, previously Executive Vice President of the Cloud and Enterprise Group. The announcement falls a few weeks after the company's 2Q14 earnings report which stated 14% total revenue growth from 2Q13 and a 3% increase in net income.
Cloud and Enterprise solutions will be a key focus for the company. Following the company's new business segmentation which began in 1Q14, Cloud and Enterprise solutions is now primarily accounted for within Microsoft's Commercial business which totaled 52% of 2Q14 revenue at $12.7 billion. Under the new segmentation, Commercial Licensing encompasses Windows Enterprise, Server Products, Office Business, Dynamics and Unified Communications. This business grew revenue 7% from the comparable quarter to $10.9 billion in 2Q14 and had gross margin of 93%. Commercial Other contains Enterprise Services, Office 365, Azure and Dynamics CRM Online. This business grew revenue 28% from the comparable quarter to $1.8 billion in 2Q14 with gross margin of 23%.
Totals for the first half of the year showed similar growth trends in the Commercial business. Total Commercial revenue grew 10% with an 82% gross margin. Commercial Licensing revenue grew 7% with a 92% gross margin. Commercial Other grew revenue 28% with a 20% gross margin. Projections for the Commercial business overall in 3Q14 were $12.3 billion compared to $11.4 billion in 3Q13.
While Enterprise and Cloud services will be a clear focus for Microsoft, consumer software will still be a core part of the company's business. Specifically, consumer software products which are primarily accounted for within Devices and Consumer Licensing and Other will continue to remain highly competitive in the consumer marketplace. Consumer Licensing for Microsoft contains the company's core consumer products, including Office Consumer, IP Licensing, Windows OEM and Windows Phone. Devices and Consumer Other contains some of Microsoft's most innovative consumer products including Office 365 Home Premium, Marketplaces, 1st Party Video Games and Bing & MSN.
In 2Q14 Devices and Consumer Licensing and Other combined for total revenue of $7.2 billion with a combined gross margin of 75%. In the first half of 2014 Devices and Consumer Licensing and Other combined for revenue of $13.2 billion with gross margin of 74%. In 3Q14 projections for combined revenue are $6 billion compared to $6 billion in 3Q13.
Overall, Microsoft expects to see strong growth ahead in its Commercial business specifically focused on growth and innovation in Enterprise and Cloud services while sales continue to remain consistent in its Consumer business. The new CEO, Satya Nadella, is an ideal leader for growth in the Enterprise and Cloud space. Leadership changes at the company will put Satya Nadella at the forefront with Steve Ballmer remaining on the Board of Directors and Bill Gates transitioning to a new role as Technology Advisor. John Thompson will also be the new Chairman of the Board which Nadella will be joining. Other highlights to watch for in the second half of 2014 will be sales of Xbox consoles and Surface as well as the conclusion of the Nokia transaction.