Microsoft's week was dominated by its quarterly earnings and a host of news related to Windows Phone.
week largely centered on its Oct. 20 earnings report, which suggested the
company's predominant revenue model-traditional software sales providing the
bulk of the billions, while online and cloud services continue to gain users at
considerable expense-remains in force.
Microsoft reported revenue of $17.37 billion for the quarter ended Sept. 30, a
year-over-year increase of 7 percent. Operating income, net income and diluted
earnings per share all rose. Business software and Windows helped drive the
increases in revenue. Microsoft also recently completed its acquisition of
Skype, forming the communications company into a new division headed by former
CEO Tony Bates; Skype software will eventually find its way into a host of
healthier PC market seems to have buoyed Microsoft's bottom line, particularly
in terms of Windows. During an Oct. 20 earnings call, Bill Koefoed, Microsoft's
general manager of investor relations, estimated that the overall PC market
grew between 1 percent and 3 percent during the quarter, overcoming a weakness
in netbook sales. "We have seen the cannibalization of netbooks," he said,
adding that Windows sales on traditional notebooks had risen 14 percent.
services still represent a considerable gray area for the company, despite
Microsoft's "all-in" cloud strategy. Koefoed alluded to "monetization
challenges" for aspects of Microsoft's Online Services division, although
overall revenue grew 19 percent. Quarterly losses for the division totaled $494
million. Microsoft is depending on the data from its Bing search engine to help
inform and refine the rest of its cloud services, and using its
search-and-advertising partnership with Yahoo to help grow market share and
described himself as thrilled" with the progress of Office 365, Microsoft's
cloud-productivity platform, but declined to break out specific subscriber
Earlier in the
week, Microsoft CEO Steve Ballmer used a talk at the Web 2.0 Summit in San
Francisco to make the case for Bing, arguing (as seen in a video
of the talk posted on YouTube) that the search engine's progress was good "not
just for share but for having enough data to continue to improve the product."
He then delved
into Microsoft's progress against Google with cloud-productivity applications
such as Office 365. "Our ramp rate of sold seats, it's got a nice trajectory,"
he said, "We've got a highly functional product that's highly available."
discussed Windows Phone, comparing it to Apple's iPhone: "You're going to have
two phones sitting there, they're going to feel good in your hand." Even so, he
suggested that Windows Phone's interface, based on a system of highly
customizable tiles, would beat out the Apple iPhone's grids of individual applications.
Windows Phone is "not seas of icons" he said, but puts "information
more ire for Google's smartphone offering. "It is very hard to be excited, for
me, about the Android phones," he said, which is exactly what you'd expect from
the CEO of Microsoft.
hopes its new Windows Phone Mango update, which offers some 500 tweaks and new
features, will give the platform the momentum it needs to combat both Apple's
iOS and Google Android, which reign as the twin titans of the mobility market.
Microsoft hopes that the combination of boosted software and new manufacturing
partners can give the platform the needed momentum. One of those partners,
Nokia, reportedly plans to show off its first Windows Phone devices at Nokia
World in London, due to start Oct. 26.
already positioning Windows Phone to target the midrange of that market.
dramatically broadening the set of price points in Mango-related phones that we
can reach," Andy Lees, president of Microsoft's Windows Phone division, told the audience
during the Asia D conference
Oct. 19. "That's particularly important because going lower down in price point
opens up more addressable market."
For a couple
of months, rumors have circulated about a stripped-down Windows Phone OS
code-named Tango, aimed at lower-cost hardware and developing markets such as
India and China. If that actualizes and succeeds, of course, it could give
Microsoft another solid number on its balance sheet. If Microsoft's competitors
manage to shut it out of the midmarket, on the other hand, it could undermine
Redmond's plans to become a substantial player in the mobility
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