Microsoft: Thanks to Windows 7, our mojo is back

Apple may have grabbed the headlines over the last few days with its iPad announcement, but the real news in the tech world is that thanks to Windows 7 sales, Microsoft had a blowout quarter, increasing revenue by 14% compared to a year ago. The company is clearly hoping that the dark days of Vista are behind it.

Microsoft released its quarterly earnings for the second fiscal quarter of 2010 yesterday, and the news was all good. Computerworld reports:

The company rang up $6.66 billion in net income, an increase of 60% from the same period a year earlier. Revenue totalled $19.02 billion for the quarter ending Dec. 31, a 14% increase from the prior year.

The numbers are so good because of Windows 7 sales. More than 60 million Windows 7 licenses were sold in the quarter, which is more than have ever been sold in any other single quarter, according to Bill Koefoed, Microsoft general manager of investor relations.

In the quarter, Windows once again became the engine of Microsoft's growth. Computerworld reports:

Windows-related sales brought in the largest chunk of revenue, at $6.9 billion, up 72.5% from $4 billion in the second quarter of fiscal 2009. Server and tools enjoyed a more modest increase, with $3.8 billion in revenue, up from $3.75 billion in the prior year.

Not all of Microsoft's businesses sidestepped the recessionary doldrums, however. Online services revenue slumped in the quarter, to $581 million, down from $609 million the year before. The business division and the entertainment and services division also had lackluster revenue.

In other words, without Windows 7, Microsoft would have had a lackluster quarter at best.

There's a lesson here for Microsoft: Good products matter. The days are long gone when the company could pump out a version of Windows, and people would upgrade to it merely because a new version was available. Windows Vista proved that.

So what's next for Microsoft? I've been using Office 2010, and it's a very solid product, although its Web-based capabilities need help. Still, I expect it to sell well once it's released. The next big milepost will be Windows 8, and we've got a while to wait for that one.

Copyright © 2010 IDG Communications, Inc.

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