Microsoft Vista Drives Sales, Xbox Tanks

Fueled by Windows Vista and Office 2007, Microsoft announced a 65 percent increase in third quarter earnings. On sales of $14.4B for the quarter, the earnings were $4.93B. Xbox sales declined sharply.

According to TechNewsWorld, Microsoft is finally starting to see some results now that Vista issues are starting to be worked out.

In comparison, Apple just posted sales of US$5.26B for their most recent quarter and earnings of $770M. Only a few years ago, Apple was hard pressed to generate $1.5B in sales in a quarter, but the gulf still remains wide compared to Microsoft.

Microsoft predicted upbeat results for their 4th quarter and said that total sales for the year could reach US$57.5B. The annual growth of 12 percent is considered "impressive for such a mature company," according to TechNewsWorld.

The Entertainment and Devices Division was cited as having a severe post holiday slump. But Blackfriarsi marketing on Friday put a finer point on it, by pointing out that Xbox sales in the holiday quarter were 4.4M units while in the calendar Q1, they dropped to 500,000 units, only a little more than 10 percent of the previous quarter.

"The fact that Microsoft is subsidizing this business may not be an issue for Microsoft directly, since they have plenty of cash. But having too much money to work with may be hurting EDD rather than helping; it allows the division to ignore problems rather than solve them," Carl Howe wrote.

The bottom line is that Microsoft hasnit yet learned how to make money on hardware products. "As long as Microsoft can avoid having to make the hard decisions necessary to make profits from each of its lines of business, it wonit succeed against other more hungry and survival-focused competitors, be it in gaming against Nintendo and Sony, in music players against Apple, or in search against Google," Mr. Howe concluded.