Despite Microsoft posting record revenues for the first
quarter of its financial year, concerns still remain over the strength and
future of Windows.
Revenues grew 11 per cent to $17.37 billion compared to the
same period last year, however operating profit rose just one per cent to
$7.2bn with the Windows, Server and Entertainment & Devices divisions all showed
Like the previous quarter’s results, the Q1 results were boosted
by Microsoft’s Office business, with Office 2010 helping to
drive revenues up by 7.7 per cent to $5.6bn and profits up 5.7 per cent to
Although the Windows section of Microsoft’s business grew (by
1.7 per cent to $4.87bn) this was below the two per cent growth seen in shipments of
PCs for the last quarter according to Gartner and IDC. The reason for this is most likely down to a
problem with piracy in China
and the Far East which is where most of the
growth in the PC business is happening at the moment.
Once again the Online Services division, including its Bing
search engine, was a major drain on the company, posting a loss of just under
$500m. However this is significantly down on losses of $560 last year and
revenue for the last quarter actually grew by 18 per cent to $625m – which
could suggest that it may have turned a corner.
Microsoft could be looking to bolster its online offerings
by purchasing the beleaguered Yahoo! which posted further disappointing results
earlier this week. However Microsoft could be facing competition from China’s Alibaba
and AOL’s Tim Armstrong.
Previously, the Entertainment & Devices divison, which
houses Xbox and Windows Phone products, had helped Office to bolster
Microsoft’s revenues but this quarter it saw profits dive by 8.8 per cent
despite revenues growing almost 10 per cent to $1.96bn.
With Windows 8 still a year away, analysts believe that
Microsoft need to come up the next big problem to solve rather than coming up
with the next version of an existing product. That could be key to Microsoft’s
continued success, but it’s not an easy problem to solve.