January 24, 2013

Microsoft's Windows 8 sales are big -- just not big enough

Windows 8 gave Microsoft a bump last quarter, though its impact was more muted than the software giant might have liked.

Windows sales rose 24% to $5.8 billion in the quarter that ended Dec. 31, two months after Microsoft unveiled its years-in-the-making Windows overhaul. That included some deferred revenue for upgrade-eligible Windows licenses sold earlier in the year.

The gain ended a streak of four straight quarters in which Windows sales declined year-over-year.

But it also pales in comparison to prior launches of of the operating system: Windows sales soared 76% during the quarter that Windows 7 launched, and sales rose by 65% when Windows Vista debuted.

PC sales have slumped lately, and Windows 8 does not appear to be doing much to buck that trend.

Microsoft also debuted Windows Phone 8 during the past quarter, but sales in that division slipped 11% from last year. That's a worrying sign, since that division also includes the aging Xbox 360 and Kinect entertainment systems, which have been a solid revenue driver for Microsoft as of late.

Office sales also slipped 10% ahead of this month's launch of Office 2013.

The Redmond, Wash.-based software giant said net income for its fiscal second-quarter, which ended in December, fell 4% to $6.4 billion, or 76 cents per share. Analysts polled by Thomson Reuters forecast earnings of 75 cents per share.

Sales -- which includes about half a billion dollars of deferred revenue for Windows, Office and Xbox promotions -- rose 3% to $21.5 billion, meeting analysts' forecasts.

Shares of Microsoft fell 2% after hours.

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