Microsoft will release quarterly earnings July 21. But the most important events of its quarter, like the Office 365 launch, aren't yet major revenue drivers.
Microsoft will
release its quarterly earnings after the market closes July 21. Analysts are
apparently expecting an increase in revenue from the year-ago quarter, with
hefty sales of flagship software such as Windows and Office.
No matter what
those ultimate numbers, however, the most interesting parts of this previous
quarter were the things unlikely to generate revenue for some time: Office 365,
Microsoft's latest major foray into the cloud, and the reveal of "Windows
8," its next-generation operating system. The company also used its
recently concluded WPC (Worldwide Partners Conference) to again highlight its
mobile efforts, including its Windows Phone "Mango" update due sometime this
fall.
Despite the
hefty revenue boost from "traditional" desktop-bound software, Microsoft has
increasingly dedicated itself to an "all-in" cloud strategy. "We're moving
forward to the cloud, public and private," CEO Steve Ballmer told those
assembled to hear his July 11 keynote speech at WPC. "We're all in, and we want
partners who are all in with us."
Mobility and
the cloud are also somewhat problematic areas for Microsoft, at least in terms
of revenue. In contrast to, say, the 100 million Office 2010 licenses shipped
since last year, or the impressive sales run of the company's Xbox Kinect hands-free
game controller, market share for Windows Phone has steadily declined in the
months since the smartphone platform's release. "We know we've got a lot to
do," Ballmer also told the audience during that same keynote. "We're all in
when it comes to mobile devices."
For the
three-month period between the end of February and the end of May, research
firm comScore estimated Microsoft's U.S. smartphone share as dipping from 7.7
percent to 5.8 percent. During the same period, adoption of Google's Android
platform rose from 33 percent to 38.1 percent, while Apple enjoyed a slight
uptick from 25.2 percent to 26.6 percent. Research In Motion continued its
market slide, declining from 28.9 percent to 24.7 percent. Microsoft has been tight-lipped
about Windows Phone sales and revenue.
It will also
be some time before the cloud side of Microsoft's equation starts generating
cash. During previous earnings calls, Microsoft executives have been reluctant
to discuss any hard metrics for business cloud adoption; nonetheless, the
company has initiated a full-on press for Office 365. Released in its final
version near the end of June, Office 365 is fundamentally a rebranding of the
company's BPOS (Business Productivity Online Suite), linking Microsoft Office,
SharePoint Online, Exchange Online and Lync Online into a platform that costs
between $2 and $27 per month, depending on options. It comes with an Office 365
Marketplace loaded with productivity applications and professional
services.
Microsoft also
used WPC to again show off Windows 8, whose release is expected sometime in
2012. In place of the "traditional" Windows desktop and Start button, Windows 8
offers a variety of color tiles designed to be equally tablet- and PC-friendly.
Finally, executives
on the July 21 earnings call will almost certainly reference Microsoft's recent
acquisition of Skype for $8.5 billion, and emphasize how the communications
company's assets will act as a force multiplier for existing products such as
Lync.
As with the
cloud and mobility, it could be some time before the monetization of the Skype
platform truly begins; but if Microsoft's numbers hit or exceed analysts'
expectations, the company could have a little more space to let these grand
plans take root.
Follow Nicholas Kolakowski on Twitter
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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