If you want to see Microsoft's future, take a look at its just-released earnings report. It shows a company increasingly reliant on selling to enterprises, and less tied to more fickle consumers.
Overall, Microsoft revenue's for the second quarter of its fiscal year increased by 2.7 percent to $21.46 billion, while its profit declined four percent, to $6.38 billion from $6.62 billion, reports Computerworld.
As is becoming standard in its earning reports, most growth was concentrated in the divisions that cater to enterprises rather than consumers. The Servers & Tools division, which focuses on enterprises, grew 9 percent to $5.19 billion in sales, with System Center revenue growing 18 percent, and SQL Server revenue up 16 percent.
The Business Division, which handles Office and related business tools, reported a pro forma revenue increase of 3 percent. That takes into account various upgrade and pre-sales offers for Office. Without taking them into account, sales were down 10 percent, to $5.69 billion. Notable, though, was that revenue from Lync, Sharepoint, and Exchange all had "double-digit percentage growth" according to Microsoft. In other words, business customers were buying.
Meanwhile, consumer-related divisions struggled. The Entertainment and Devices Division had its revenue drop 11 percent to $3.77 billion. As for the Windows division, it showed suprisingly strong results, $5.88 billion in revenue, up 24 percent compared to a year earlier. That number really isn't as strong as it appears, though, because it includes revenue from Windows 8 pre-sales and Microsoft's Windows Upgrade Offer. When you take those into account, revenue was up 11 percent. Still, that's a very solid number. Keep in mind, though, that Windows sells to both enterprises and consumers, and Microsoft didn't give a breakdown about the relative strength of each market.
All in all, the report shows a company increasingly reliant on sales to big businesses. The New York Times summed it up best in its article about Microsoft's earnings:
Microsoft's results showed far more vitality in areas in which the company caters to big business customers, rather than consumers -- a market that has eluded Microsoft many times over the years. Its best performing business was its server and tools division, which had a 9 percent increase in sales in the quarter.
Microsoft didn't break out sales of its Windows RT-based Surface tablet, but most indications are that sales are sluggish. That should be no surprise. It's a consumer-focused tablet, but too expensive to make headway against the iPad or less-expensive Android tablets.
Don't be surprised, though, if true Windows 8 tablets, including the upcoming Surface Pro, will be a hit. Given that they run full-blown Windows 8, they're likely to be bought by enterprises.
Microsoft's possible investment to buy part of Dell and help the company go public is another indication that Microsoft increasingly sees itself as an enterprise-focused company. Forrester Research analyst David Johnson told the Wall Street Journal's CIO Report that the deal "could help Microsoft and Dell create a one-stop-shop for corporate customers to buy or lease computing infrastructure, networking, storage and software."
And Bill Whyman, an analyst at ISI Group told the New York Times that the latest earnings report "shows that Microsoft is evolving really into an enterprise software company."
That's not to say that Microsoft will abandon consumer markets. There's still money to be made there. And in today's world, the way to the enterprise often first goes through consumers. But more and more, Microsoft will be a company dependent on sales to big businesses, not consumers.