updated 04:25 pm EST, Thu January 27, 2011
Microsoft Q4 2010 ahead on PCs, behind on devices
Microsoft today posted results that passed well over expectations. It posted a high $6.63 billion in profit and, despite the iPad effect and the absence of an OS launch, outperformed predictions on Windows. The OS and its Live subset earned $5.04 billion where most had expected just over $4.9 billion. Its Office-focused business team and its server team also earned more than first thought.
Over 300 million Windows 7 licenses have been sold since the OS first went on sale in October last year, Microsoft said.
The Entertainment and Devices division was a disappointment for analysts. Most had expected over $4.05 billion, but the group fell short at $3.7 billion even as its sales went up 55 percent. The hardware-focused group was expected to thrive on the eight million Kinects it sold in the first 60 days along with a good standing for the Xbox 360 against the Wii.
The company still declined to give any Windows Phone 7 sales figures and may have taken a hit from the $500 million spent in marketing combined with lukewarm results. Microsoft has kept referring to the number of devices sold to carriers but not real sales to customers, making it difficult to tell how successful the platform might be. Some carriers took to cutting prices relatively early.
The gap between the Entertainment and Devices group and Windows was one of its lowest ever, at $1.34 billion.
For Apple, the results were mixed. It still beat Microsoft on revenue and widened the gap, earning $26.74 billion versus Microsoft's $19.95 billion. Its profit was lower, however, at $6 billion where the higher-margin software focus gave Microsoft a higher profit. Microsoft's results were also a wider gain than they appeared as they no longer included the one-off burst from the Windows 7 launch and its matching pre-order campaign.
Microsoft didn't give a detailed outlook but is expected to lean again on Kinect without any major, mainstream software releases in store. Windows Phone 7 should get a lift next month at Mobile World Congress, when it will likely add CDMA support for more carriers and possibly see new devices.