Microsoft's week included its earnings report, which revealed a dip in Windows-related revenue, and the offering of a substantial bounty for operators behind a botnet.
Microsoft's week centered on its quarterly results, which, while strong, also hinted at a potential
trouble spot for the company.
The company reported revenues of $17.37 billion for its
fiscal fourth quarter that ended in June, an 8 percent increase from the year-ago
quarter. Quarterly operating income, net income and diluted earnings per share
were $6.17 billion, $5.87 billion, and $0.69 per share, all of which
represented increases. For the entirety of the fiscal year, the company
reported revenues of $69.94 billion.
Most of Microsoft's divisions reported growth in revenue,
including the Microsoft Business Division (driven by sales of Office 2010),
Server and Tools (off products such as Windows Server), the Online Services
Division, and the Entertainment & Devices Division (the Xbox Kinect
hands-free game controller continues its heady sales pace). However, Windows
and Windows Live Division revenue declined 1 percent during the quarter.
During the July 21 earnings call, Microsoft executives
attributed this dip to softening PC sales. Considering Windows' place within
Microsoft as a revenue driver, any decline is potentially disconcerting-especially
since the company's "all in" cloud strategy has yet to yield substantial
revenues along the lines of its traditional, desktop-bound software.
Windows 7 has sold some 400 million licenses since its October
2009 release. Microsoft has similarly high hopes for the next version of its
popular operating system, internally code-named "Windows 8." In place of the
traditional desktop and taskbar, Windows 8 relies on color tiles designed to be
equally tablet- and PC-friendly.
The release of Windows 8 will give Microsoft the opportunity
for a more substantive play in the tablet market, where the company holds
something of a niche spot. According to new data from research firm Strategy
Analytics, Apple's iOS occupied some 61.3 percent of the tablet market in the
second quarter of 2011, followed by Android with 30.1 percent, Microsoft with
4.6 percent, and QNX (which RIM uses for the PlayBook) with 3.3 percent.
Undefined "Others" brought up the rear with 0.7 percent.
"Microsoft captured a niche 5 percent global tablet share in
Q2 2011, leveraging Windows 7 through partners such as Fujitsu," read a July 21
note accompanying the research. "RIM and its QNX platform captured 3 percent
global tablet share in Q2 2011. The first-generation PlayBook model experienced
a lackluster launch due to product design issues surrounding native email
support."
Windows 7 tablets lack the presence of the iPad or Android
tablets on U.S. store shelves, although Microsoft featured several meant for
the Asian market at its booth during this year's Consumer Electronics Show in
Las Vegas. Lenovo
is gearing up to release the IdeaPad Tablet P1, which features a 1.5GHz
Intel processor powering Windows 7.
Microsoft is also hoping that cloud-related revenues pick up
over the next several quarters, especially in light of Office 365's recent
release. That cloud-based platform, rebranding the company's BPOS (Business
Productivity Online Suite), links together Microsoft Office, SharePoint Online,
Exchange Online and Lync Online as a subscription service costing between $2
and $27 per month, depending on options.
"As we continue to have conversations about migrations to
the cloud," Microsoft CFO Peter Klein told
analysts and reporters listening to the July 21 earnings call, "you'll start to
see that in our multiyear licensing revenue." He also suggested that Office 365
would boost "revenue and profit per seat while increasing customer commitment."
This week, Microsoft also reiterated its seriousness about
eliminating botnets, offering a $250,000 bounty for information leading to the
arrest and conviction of the operators behind the Rustock botnet-which, before
Microsoft helped disable it in March, was reportedly responsible for billions
of spam emails per day.
"This reward offer stems from Microsoft's recognition that
the Rustock botnet is responsible for a number of criminal activities and
serves to underscore our commitment to tracking down those behind it," Richard
Boscovich, senior attorney for Microsoft's Digital Crimes Unit, wrote in a July
18 email posted on The
Official Microsoft Blog. "The legal action Microsoft has taken in civil
court has already been successful, helping us take down the Rustock botnet and
disrupt its operations."
A safer online environment, of course, neatly dovetails with
Microsoft's strategy to push its audience increasingly into the cloud.
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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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