Strong Enterprise Demand
Matt Rosoff, an analyst with Directions on Microsoft, agreed that Office was one of the highlights of the quarter, noting that sales of business products such as Office 2007 and SharePoint 2007 continue to be strong, while companies appear to already be covering Windows Server 2008 and SQL Server 2008 on multiyear license agreements.Adding to Microsoft's financial strength is the fact that its Xbox business is finally contributing to the bottom line, even beating the company's own expectations in terms of console sales, the games-per-console attach rate and Xbox Live memberships, he said. Overall, PC sales grew around 15 percent, which helped software sales numbers, Rosoff said, adding that those businesses replacing their hardware are probably gradually deploying
Rob Enderle, an analyst with the Enderle Group, said that much of
Microsoft's large-business revenue is now institutionalized under
enterprise agreements and are "relatively recession-proof."
The outlook going forward also is strong, with the expected release of
Windows Server 2008 in February, followed by Hyper-V hypervisor
software within six months.
"Windows Server 2008 in particular has had a tremendous amount of
interest, and the new Hyper-V offering seems to be picking up an
unusual amount of IT focus for something this new," Enderle said.
"Demand for both seems surprisingly strong, but testing is still in the
early stages, and so these are just initial indicators."
On the downside, he said that ongoing speculation about the next version of the operating system, currently dubbed Windows Seven, and that it might be released in two years or less, is causing many businesses to consider skipping
"There is no enterprise movement to adopt
may fix that, but I don't yet have any hard evidence that it will, and
the changing economic conditions are making it more difficult to
justify a desktop operating system move," Enderle said.
"Overall, Microsoft's revenue from multiyear license agreements is growing faster than the company expected, and faster than in recent years. That suggests strong enterprise demand. Demand seems to be high for the 2007 releases of Office and SharePoint Server and the forthcoming 2008 versions of Windows Server and SQL Server," Rosoff said.