Photo: sjsharktank / Flickr

Nothing must be as frustrating and equally satisfying as being the ‘top dog’ who’s always proving your haters wrong. Microsoft, and CEO Steve Ballmer, are in this very position, going into the third earnings call in a row where they have proven their doubters wrong.

Posting big numbers

Microsoft posted record second-quarter revenue figures, as well as record profit numbers. Microsoft revenue for the quarter totaled just shy of $20 billion, coming in at $19,95 billion. Of this operating income and net income were both sky high at $8.17 billion and $6.13 billion respectively, resulting in earnings per share of $0.77. This is a very respectable climb, with revenue being 15 per cent greater than it was in the same period last year, and earnings per share spiking 28 per cent.

Kinect, you beauty!

While 2010 was a frantic year for Microsoft, seeing Windows 7 uptake spiking, and the release of the latest version of Office for PC, the big, big, big story of 2011 was the company’s unbelievable Kinect sales. The Xbox 360 peripheral sold 8 million units in just 60 days, to become the fastest selling consumer electronics device in history!

Not even Microsoft was ready for this, with CFO Peter Klein saying: ‘We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect. The 8 million units of Kinect sensors sold in just 60 days far exceeded our expectations.’ In fact, Kinect did so well for MS that revenue for the Entertainment and Devices division was up a remarkable 55 per cent, while the Windows division fell 30 per cent.

Hurry on, 2011

In the current calendar year, it’s all eyes on what Microsoft revenue can be derived for Windows Phone 7 sales. With Windows OS and Office providing consistent sales numbers, and the Xbox division finally proving good as a revenue spinner, it’s all eyes on what the company’s mobile OS platform can do.

Photo: gynti_46 / Flickr

As Microsoft Office 2010 is readied, Microsoft saw its quarterly profit jump by 35 per cent, thanks in no small part to Windows 7 and undoubtedly making CEO Steve Ballmer very happy.

The critically received operating system has been selling very well, helping propel Microsoft to record Q3 revenue of $14.5 billion (the company’s financial year starts in June). This revenue represented a noteworthy 6 per cent increase over the same time last year but Wall Street, ever so hard to please, saw Microsoft share prices fell with the news.

Xbox Live

Outside of Windows 7, Microsoft reported strong growth within Xbox Live, Bing, and the company’s upcoming cloud services.

Business buyers return

Photo: Microsoft

Microsoft believes a resurgent technology industry could see Windows 7 grow more still. Chief Operating Officer, Kevin Turner, claimed that business customers were beginning to ‘refresh their desktops’ and expected Windows 7 sales and momentum to remain strong.

One-tenth of PCs now have Windows 7

The performance of Microsoft’s current operating system sees the OS business group grow by 28 per cent, when compared to the beginning of last year, and over one-tenth of PCs around the globe are now running this operating system. These figures represent a stark contrast to the badly received and disappointingly selling Windows Vista operating system, which was mired with problems from launch day, forcing Microsoft to announce a replacement sooner than the company would have liked.

Project roadmap

Photo: Facebook

Microsoft has recently released its Kin handsets, and is readying the release of Windows Phone 7 Series. In addition, the company is still investing a lot of resources into its Xbox platform, which has seemed to take a somewhat permanent turn to profitability. The company has also just sent Microsoft Office 2010 for pressing, representing the preparation of its other cash cow. The landscape for Microsoft Office 2010 is significantly different than it was for previous releases, with free cloud-computing productivity suites proving viable alternatives. In this regard, Microsoft teamed up with Facebook to release docs.com in hopes of slowing, and ultimately eliminating, the progress Google Docs has made.

Photo: Apple

In the years since Microsoft Office 2007 was released, with various free online productivity suites available, Microsoft Office 2010 has a massive undertaking on its hands. The Redmond-based company announced it sent Office to be printed and duplicated in bulk, as well as providing manufacturers an opportunity to prepare for the launch.

Cash cow returns

Though Microsoft’s business spans multiple industries now, including video gaming, personal music players, mobile phones and search, the lion’s share of the company’s profits comes from its productivity suite, Office, and its operating system, Windows.

Pricing and availability

Photo: Google

Microsoft Office 2010’s consumer release is scheduled for June, with the US getting it first and other regions getting the software at a later stage. Business customers, who tend to be large enterprises who order many licenses, will receive the software on May 12. When Office is finally available in the UK, it is to be priced as high as £430 with the minimum cost of entry for the desktop software to be £109.

Online strategy

Microsoft Office 2010 brings with it, for the first time in its history, an online component equivalent to Google Docs. The fact that Microsoft is embracing – out of force, not choice – the cloud in this way does not bode well for Office’s total revenue. While it is expected that Office will do well, a non-negligible percentage of revenue will be lost to those who opt to go for the free online version of Office 2010.

In this regard, Goggle has been making several advances acquiring companies that make for easier file-sharing between Docs and Office, as well as accelerating the development of its cloud service. With this being Microsoft’s first serious foray into online productivity suites, it stands to reason that the service may have growing pains in the early days.

Photo: Google

Google’s recent acquisition of DocVerse, an online collaboration tool for Microsoft, for $25 million, shows that they’re all in, too, but in the Microsoft-dominated productivity suite space.

DocVerse

Photo: Stock.Xchng

Founded by a pair of former Microsoft employees, DocVerse is an online collaboration tool for Microsoft Office, which allows users to share their work as well as comment on the work in a manner that is visible to others. It also allows for editing of documents online, from Word to Excel and even PowerPoint slides. Having been funded an approximate $1.5 million and founded a mere two years ago, this $25 million Google purchase represents a good exit for the company’s founders.

The productivity suite race

In the productivity suite race, Microsoft Office wasn’t first to mass market – Lotus was – but Microsoft became the unassailable leader with its Office Suite. Google, however, beat them to the punch with productivity software in the cloud in the form of Google docs, and Google hopes DocVerse will fortify that position, as well as continue to erode Microsoft’s productivity suite lead. Microsoft are not ignorant to this threat, with Steve Ballmer admitting they were slow to start in cloud computing, but are reacting to Google’s advancement so as to protect, and ultimately grow, their business.

Some perspective

To give a little perspective as to how important Microsoft Office is to the Redmond-based company, the productivity suite accounts for nearly 90% of its business division’s revenue, which amounted to over $4 billion in revenue in the last quarter.

Photo: Microsoft

Google, using its usual strategy to disrupt most of the industries it gets involved in, has made DocVerse available for free, even for users who were paying the subscription fee for the premium features. The company has indicated it will roll out across Google apps so as to allow users to make the transition from desktop to online easier. How’s that for a direct assault on Microsoft’s cash cow?