Windows' cut of Microsoft revenue drops to two-year low
Q4 2011's revenue, income shares at lowest level since Vista's last months
Computerworld - Windows' contribution last quarter to Microsoft's revenue hit its lowest point since Vista's swan song more than two years earlier, according to figures released by the company Thursday.
For the quarter ending Dec. 31, the Windows division accounted for 22.7% of the company's total sales, its lowest share since the 20.3% that the group recorded during the third quarter of 2009, at the end of Vista's reign and just weeks before Windows 7 launched.
"Microsoft's Windows division continued to slide," said Allan Krans, an analyst with Technology Business Research, in an email late Thursday. "This marked the fifth consecutive quarter of incremental or negative revenue growth for the division."
Windows revenue for 2011's final quarter was $4.74 billion, down 6.1% from the $5.06 billion in the same period the year before. Microsoft's total revenue last quarter was $20.89 billion.
Since Windows' peak in the final quarter of 2009 -- Windows 7 launched in the middle of that three-month period -- the operating system's portion of Microsoft's revenue has been shrinking. Windows' share has fallen almost 14 percentage points since late 2009, when the division accounted for 36.3% of Microsoft's revenue.
Windows' contribution to Microsoft's operating income -- revenue minus expenses, before taxes -- has followed the same downward trend: Windows' 35.7% share of operating income last quarter was the lowest since the 32.6% posted in 2009's third quarter.
Not surprisingly, Windows dropped to third in Microsoft's revenue lineup last quarter, falling behind both Office and the company's server software. The last time that Windows failed to take the No. 2 spot among the company's groups -- it's long lagged behind the Business division, which does Office -- was also in the third quarter of 2009.
But Windows' revenue dip wasn't a surprise.
Last week, Microsoft executives set the stage by warning that research firms may have underestimated the fall off in PC sales. At the time -- and during a conference call with financial analysts Thursday -- Microsoft pinned blame on flooding in Thailand last year that crippled factories and tightened supplies of hard disk drives.
Krans said Windows' problem wasn't limited to parts shortages.
"While the latest decline ... can be attributed in part to decreased PC shipments caused by 4Q flooding in Thailand ... the 4Q11 result follows the recurring trend of decreased PC shipments and resulting decline in Windows sales," said Krans, noting the correlation between PC and Windows sales.
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