updated 04:35 pm EST, Thu January 19, 2012
Microsoft revenues mask Windows PCs trouble
(Update on PC decline reasons) Microsoft on Thursday revealed record results that masked underlying problems with its core Windows business. It generated $20.5 billion in revenue in the fall, a five percent increase from the same season a year earlier. Most of the increases came from its server business and the Xbox-related Entertainment & Devices group, each of which grew their own revenue by 11 percent and 15 percent.
The Business division handling Office also grew three points and would have grown seven percent if not for an Office 2010 upgrade program. Even its Online Services section, which regularly loses money, saw its revenue up 10 percent.
Nonetheless, Microsoft revealed that its Windows and Windows Live group had seen its revenue drop six percent. The company had already signaled that Thailand flooding and the resulting hard drive shortages would hurt its business, but the decline may not entirely be explained by the low supply. Studies from IDC and Gartner showed that Apple wasn't affected and that most of the share drops came from normally resilient Windows PC builders like HP and Acer.
Over 525 million Windows 7 licenses had shipped, Microsoft said.
The company was optimistic that new ultrabooks and hope for Windows 8 would give it a positive 2012. It still had numerous problems to overcome, however, including low Windows Phone share and concerns that Windows 8 tablets might do little to counter the rise of the iPad and Android.
Update: During its results call, Microsoft blamed the six-point Windows drop on weak netbook sales. Netbook sales have usually dropped in the past two years as a direct result of the iPad and, to a small extent, Android tablets.