Profits down but Window of opportunity creaks open for Microsoft

Technology giant Microsoft has defied market speculation with higher-than-expected profits. There's life in the PC yet.

by Michael Northcott
Last Updated: 19 Aug 2013

Investors who got out of Microsoft in the last few weeks will be cursing their luck. The software titan made an impressive $5.11bn (£3.2bn) profit in just three months ending March 31. And while this is a drop in profits on last year's $5.23bn for the same quarter, it isn’t nearly as bad as analysts expected.

Microsoft attributes the better-than-predicted results to an unexpected surge in sales of its Windows 7 operating system. This was a lucky break for the giant, given that entertainment revenues (the Xbox, in layman’s term) have dipped by 16%. Sales of the Windows software rose 4% - fantastic considering forecasts were projecting a 4% decline. Not bad, given the car crash that was Vista.  

Microsoft is hoping to capitalise on the success of Windows 7 by ramping up PR for Windows 8 now. Windows 8 is designed to operate across PCs, mobile and tablet computers. This makes it a real challenger to the dominant Apple and Google offerings, iOS and Android. It could also create a pivotal moment for Microsoft, should the grandaddy of software finally get some traction in the lucrative mobile technology market - when it finally launches, that is.

Microsoft will have a struggle on its hands if it wants to prise market share out of its rivals’ grip though – between them, Apple and Google have the smartphone market all but sewn up. Last year, Google’s Android was the most-shipped at 48.8%. Rival Apple had a more modest 19.1%. Microsoft CEO Steve Ballmer may well be hoping that these two giants busy themselves taking bites out of each other and ignore the dark horse in the running. Or should that be 'dark minnow'. By most measures, Microsoft’s current Windows Phone features in the ‘Other’ category which includes other operating systems, and in its entirety is about 8% of the market.

Still, if Microsoft can pull off its turnaround with Windows 8, Ballmer will have much to celebrate. As long as he doesn’t do it with another YouTube moment at a developers conference…

Find this article useful?

Get more great articles like this in your inbox every lunchtime