updated 04:35 pm EDT, Thu July 21, 2011
Microsoft Q2 2011 shows Windows on decline
Microsoft on Thursday showed small if mounting problems for Windows with another drop in revenue for its most important business. The company saw its second straight quarter of declines in the Windows group's revenue, which dropped one percent in the spring. The decline also led to Windows' revenue dropping for the entire fiscal year by two percent.
The company justified the drop as the result of its business settling down in the year after the Windows 7 launch. Without the spurt from the then-new OS in late 2009, revenue growth would have roughly been in line with the two to four percent growth of the broader industry, Microsoft argued. As evidence, it pointed to its reaching 400 million Windows 7 licenses sold.
So far, the company has been silent on how much of the decline was owed to netbook sales collapsing. Microsoft's revenue from netbooks dropped 40 percent in the winter as people either bought iPads instead or saw little incentive to upgrade.
Of all its divisions, the fastest-moving group was its Entertainment & Devices group. The team's revenue cooled off after hot holiday sales from the Kinect but, at $1.49 billion, had shot up 30 percent year-to-year and 45 percent for the full year.
Overall, Microsoft's revenue was up eight points to a record $17.37 billion, which still put it over $10 billion behind Apple's $28.57 billion. Its net profit was also up a high 30 percent to $5.87 billion, though this was leaning mostly on its business and server groups.
The Windows developer's movement in PC revenue was in sharp contrast to Apple's, where its Mac shipments were up 14 percent year-to-year without having to lean on a new OS release. Microsoft predicts its total business will still grow three to five percent in revenue between now and June 2012 but will hinge both on its ability to offset the Mac and iPad as well as its gamble on a radical new Windows 8 interface. The company is betting that tablets with desktop-class operating systems can lead the market and is shipping the same interface even for non-touch hardware.