updated 04:55 pm EDT, Thu July 22, 2010
Microsoft makes 16m in Q2 but barely past Apple
Microsoft this evening reported a best-ever spring quarter revenue that was undermined by its proximity to Apple's. The Windows developer made $16.04 billion in revenue but was just $300 million ahead of Apple's $15.7 billion during the same period. The gap in net profit was wider but still relatively close, at $4.52 billion for Microsoft versus $3.51 billion for the Mac maker.
The 22 percent year-over-year jump for Microsoft was credited both to the continued success of Windows 7, which was finally reaching large business, as well as the launch in May of Office 2010. The company said it had sold 175 million copies of Windows 7 both pre-installed and at retail.
Also touted were Windows Server, the redesigned Xbox 360 and Bing, which has kept gaining share for over a year.
The results nonetheless masked certain ongoing problems at the Redmond-based company. Its online services group, including Bing, fell slightly below expectations and made just $565 million. Entertainment and devices, which includes the Windows Mobile, Xbox and Zune groups, made much more at $1.6 billion but had its results tarnished by the complete failure of the Kin, which in its brief life managed fewer than 10,000 sales despite a large ad campaign.
While Windows and Office are still poised to be revenue drivers, Microsoft placed most of its hopes for the fall on the launch of the Kinect for the Xbox 360 and Windows Phone 7, which it hopes will reverse years of decline in Windows Mobile.
The expected growth is essential for Microsoft, but the ongoing summer quarter could represent the first in well over a decade in which Apple's is higher than Microsoft's. Apple's emphasis on hardware sales over software has helped it grow much faster in recent years, and the launch of the iPad along with massing iPhone sales pushed revenue growth almost three times faster year-over-year to 61 percent, enough to all but to negate Microsoft's existing size advantage.