Microsoft's quarter saw robust business software and entertainment-product sales, although Windows sales remain soft.
Microsoft's
results for its second quarter 2012 offered little in the realm of the
unexpected: Xbox 360 and Kinect hands-free controllers continued to sell at a
steady clip, as did business software, while Windows revenue dipped on
softening PC sales. All told, quarterly revenue topped $20.89 billion, a
year-over-year increase of 5 percent, with net income of $6.62 billion.
In a Jan. 19
statement released ahead of its quarterly earnings call, Microsoft reported
that some 18 million Kinect sensors have been sold to date, firmly establishing
the device-which will soon spread beyond the gaming realm to Windows-as a solid
hit. Office 2010 has managed to sell some 200 million licenses in the 18 months
since its launch, the company added, while Windows 8 licenses topped 525
million sold.
Microsoft has
also been pushing several cloud-based productivity initiatives, including
Office 365. "Today, more than 100,000 businesses have made the commitment to
our online services," Peter Klein, Microsoft's chief financial officer, told
media and analysts listening on the call.
However, those
cloud initiatives have yet to generate revenue on the scale of Microsoft's
traditional software such as Windows and Office. After Office 365, Windows
Azure is Microsoft's cloud property with the most penetration among customers,
according to company executives.
Microsoft's
Server and Tools business also increased 11 percent year-over-year, thanks to
revenue growth in the Windows Server and SQL Server premium-edition segments.
System Center revenue growth increased 20 percent.
Despite the
growth in many divisions, Windows and Windows Live division revenue dipped 6
percent from the prior period to $4.74 billion. Perhaps predictably, Windows
sales in emerging markets have grown faster than those in developing markets,
according to Microsoft executives on the call.
PC sales have
softened in recent months, a situation reportedly exacerbated by flooding in
Thailand, which curbed the global supply of hard drives. In 2012, manufacturers
are hoping consumers will gravitate toward the various models of ultrabooks-very
thin and light notebooks with premium hardware specs-demonstrated at this
January's Consumer Electronics Show (CES) in Las Vegas.
The softness
in PC sales, however, is apparently asymmetrical. Bill Koefoed, Microsoft's
general manager of investor relations, told media and analysts on the call that
netbooks had declined to around 2 percent of the overall PC market in the past
year, influencing the segment's overall numbers. "Consumer PCs grew aside from
that," he said. Business PC sales have also proven somewhat more robust than
their consumer counterparts.
At CES,
Microsoft CEO Steve Ballmer also demonstrated many of Microsoft's initiatives
for the coming year, including a renewed push for Windows Phone and Windows 8.
Microsoft is developing the latter to happily exist on both traditional PCs and
tablets, which will (in theory) allow it to not only maintain Windows'
traditional dominance on laptops and desktops, but also challenge Apple's iPad
in the realm of portable touch-screens.
The Windows 8
beta is expected to launch in February, something Microsoft reconfirmed on the
earnings call.
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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