MS sales soar on Vista, trail on Zune

CFO Chris Liddell bore out the claim in his breakdown of the company's figures, which had Vista generating at least $300 million more than expected while Office 2007 created an additional $200 million beyond forecasts. It was an "excellent quarter," Liddell said.

Although CEO Steve Ballmer had told investment groups that predictions of exceptional sales were "out of whack" with reality, the company has officially maintained that its sales were doing very well in the wake of Vista. It reported that the new OS sold twice as quickly as Windows XP, even in the habitually piracy-ridden Chinese market where many had expected Microsoft to fare the worst. No mention was made, however, of the exact number of copies sold.

Less successful, however, was the company's entertainment division. The primarily hardware-oriented branch of the company saw a 21 percent drop in sales compared to the holiday season, which was cited as a reflection of the typical post-holiday slump. The decrease wasn't surprising, said Liddell, as these sales almost always dropped in the wake of the gift-giving period.

Much of this poor performance was attributed to the Zune, say reports. While the Xbox 360 is doing well and will have sold as many as 12 million units from the 2005 launch until June, the new media player's expensive launch campaign and relatively flat sales are said to have taken away some of the profit from the entertainment group.

Microsoft was still prepared to sell one million Zunes by the middle of the year, Liddell noted, indicating a still modest uptake compared to the over 10 million iPods sold by Apple in its latest quarter alone.