Free Newsletters for the Channel
Register for Your Free Newsletter Now
Microsoft Q4 Financial Results: A Reality Check
The VAR Guy
July 22, 2011
3 Min Read
Microsoft‘s revenue cup continues to runneth over — despite continued concern about Windows sales. For its Q4 ended June 30, Microsoft delivered record revenue. But take a closer look and you’ll see strengths and weaknesses across Microsoft’s business — including a 1 percent dip in Windows sales, and no mention at all of tablet or smartphone momentum. Here’s what Microsoft said… plus a reality check from The VAR Guy on each point.
The highlights include…
Microsoft Business Division…
Microsoft said revenue for the fourth quarter grew 7% and 16% for the full year. Office 2010 continues to be the fastest-selling version of Microsoft Office in history with over 100 million licenses sold, Microsoft said.
The VAR Guy said It’s hard to argue with those results. Despite growing adoption of Google Apps and other cloud-based productivity applications, Office remains dominant. And super-profitable.
Server and Tools…
Microsoft said Server & Tools revenue grew 12% for the fourth quarter, the fifth consecutive quarter of double-digit growth, and grew 11% for the full year. Windows Server, System Center, and SQL Server continued to drive revenue growth in the segment, Microsoft said.
The VAR Guy said he’s impressed. Despite competition from Linux, Oracle and other entrenched giants, the Windows Server business continues to grow. Again, impressive.
Windows and Windows Live Division…
Microsoft said revenue declined 1% for the fourth quarter and revenue for the full year decreased 2%. Microsoft noted that Windows 7 has sold over 400 million licenses and business deployments continue to accelerate.
The VAR Guy said heck, even Apple this week admitted that iPad sales are eating into Mac sales. So it’s only logical that iPad sales are chipping away at PC sales in some areas — and therefore impacting Windows licenses. Is this a big red flag for Microsoft and partners? Hmmm… In some ways yes. Generally speaking, Windows 7 is the strongest desktop operating system release since Windows 95. Yet sales are slipping ever-so-slightly.
Online Services Division…
Microsoft said revenue grew 17% for the fourth quarter and 15% for the full year, primarily driven by increases in search revenue. Bing’s U.S. search share increased 340 basis points year-over-year to 14.4% this quarter. Also, Entertainment & Devices Division revenue grew 30% for the fourth quarter and 45% for the full year, due to the ongoing momentum of the console, Kinect, and Xbox Live.
The VAR Guy said … it’s good to see competition against Google. Competition drives innovation. But when was the last time Microsoft cheered about having 14.4 percent share in any market? The Microsoft celebration shows just how difficult it is to compete against Google.
What Microsoft Didn’t Say…
The official Microsoft earnings release didn’t mention Windows Phone 7 at all… a sure sign that Microsoft continues to struggle in the smartphone market. Also, no mention of tablets. Oh, and come to think of it: No mention of Hyper-V virtualization. Considering Hyper-V’s relatively small base in the market, shouldn’t sales be growing sharply? Hmmm…
Elsewhere, there was passing mention about Office 365 and Windows Azure, as COO Kevin Turner and other executives insisted that Microsoft is well-positioned to profit from the cloud. True confession: The VAR Guy agrees that Microsoft is well-positioned in the cloud, but when will Microsoft start disclosing cloud revenues? Are they too small to mention right now?
Despite those questions, The VAR Guy can’t ignore one simple fact: The Q4 results represent record revenues for Microsoft.
About the Author
You May Also Like
Mar 24 - Mar 27, 2025
Mar 24 - Mar 27, 2025
The Channel Partners Conference & Expo, co-located with MSP Summit, is the gathering place for the technology services community. Agents, VARs, MSPs, integrators and service providers will converge to share ideas and drive discussion on the topics shaping our industry.
REGISTER NOW