Microsoft Earnings, Kinect Sales, Salesforce Conflict Marked Week

 
 
By Nicholas Kolakowski  |  Posted 2011-01-30
 
 
 

Microsoft's week was all about the numbers, courtesy of its Jan. 27 quarterly earnings call.

For the three months ended Dec. 31, Microsoft chalked up $19.95 billion in revenue and $6.63 billion in net income. It sold some 8 million Kinect units in the hands-free controller's first 60 days of release, giving the company a solid win for the holiday season. The company also announced during the earnings call-following up on reports from earlier in the week-that approximately 2 million Windows Phone 7 units had been sold by manufacturers to retailers, although the actual number in consumers' hands is in question.

Sales of Office 2010, the latest edition of Microsoft's productivity software, are apparently outpacing Office 2007 sales by 50 percent over an equivalent period. In addition, some 300 million Windows 7 licenses have sold since its October 2009 release, and CFO Peter Klein claimed during the earnings call that some 90 percent of enterprises worldwide have started their migration to the operating system.

Some of those numbers weren't quite so positive. Microsoft's Online Services Division took a $543 million hit in the quarter, a significant tumble even from the $463 million lost during the same quarter in 2009. That brings Microsoft's total division losses for the six months ending Dec. 31 to $1.1 billion. The company is obviously willing to burn that sort of cash to keep Bing viable against Google in the search game, and executives on the earnings call cautioned that certain online initiatives, including Bing powering Yahoo's backend search results, have yet to yield their full potential in revenues.

Microsoft also has yet to see substantial revenues from its cloud initiatives. "We obviously haven't given any guidance on the revenue of that and how fast it's going to ramp up," Klein said on the call. "It's one of those things where it's going to happen, and the exact sort of speed of the ramp is uncertain. I do believe that once it starts to accelerate, it's going to accelerate pretty fast."

Microsoft's cloud projects include Azure and the upcoming Office 365, which offers businesses a platform for staying up-to-date with the latest versions of Microsoft Office, SharePoint Online, Exchange Online and Lync Online. In a competitive frame, many of those cloud offerings compete with similar products from Google and Salesforce.com.

In yet another sign of just how seriously Microsoft takes its cloud aspirations, the company moved this week to block a former executive from joining Salesforce.com. Matthew Miszewski, formerly general manager of worldwide government at Microsoft, had been hired by the cloud-computing company as senior vice president of its global public sector.

"In plain violation of his employment agreement with Microsoft, Miszewski has accepted employment with Microsoft's direct competitor Salesforce.com," reads a Jan. 26 complaint Microsoft filed with the Superior Court of the State of Washington for King County, "in a position that targets precisely the same market segment-government and public-sector customers-that was Miszewski's area of responsibility while employed at Microsoft."

(Also in the lawsuit category, Microsoft filed a complaint with the U.S. International Trade Commission against TiVo, asking for an import ban on the latter's digital video recorders. In the complaint, Microsoft accuses the company of infringing on four patents.)

Even as it gears up to battle for cloud-space dominance, Microsoft also seems to be prepping to release the Internet Explorer 9 Release Candidate. "The software giant is expected to unveil the Release Candidate version of Internet Explorer 9 at an event in San Francisco on February 10," read a Jan. 28 posting on the blog WinRumors, which also claimed the software "will include a number of new enhancements from the previous public beta build."

As this week's quarterly earnings call demonstrated, Microsoft continues to perform strongly in its traditional product lines such as Windows 7 and Office 2010, in addition to its Kinect success. Making its presence felt in the more volatile mobile and online sectors, though, has become a source of concern and focus.

 


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