With Apple and Google recently posting bumper profits, the pressure was on Microsoft to respond with revenue that shows it is still a contender. Today the Redmond giant responded, and thanks largely the success of Xbox 360 and Kinect, Microsoft has been able meet those expectations.
Overall Q4 fiscal earnings show revenue of $17.37 billion – up 8% from the same period in 2010. This helped to generate $6.2 billion in profit for the company, not too bad in a period of such economic turmoil. The full financial year brought in $69.94 billion of revenue, 12% higher than the previous year. Overall these are positive numbers for Microsoft, though they do mask areas which aren’t doing so great.
The Entertainment & Devices Division, the part that includes the Xbox 360 and Kinect, saw a 30% rise in its revenue throughout this period. Sales of Kinect and Xbox 360 systems were strong throughout the year, helping the company to shatter expectations. While many hardcore gamers may feel it’s a fad, clearly Microsoft are reaping financial benefits from their Kinect investment.
Xbox 360 and Xbox Live remain as popular as ever, though it could be argued that the prolonged PSN outage during May aided Microsoft. With a number of key exclusive titles coming throughout the 2011 holiday period, including Gears of War 3 and the amazing Xbox 360 Limited Edition Kinect Star Wars Bundle, it will be interesting to see if Microsoft can increase these sales figures further still.
Other areas of interest include the continued success of Microsoft Office 2010, which has shipped over 100 million licenses. A slight decrease in sales of Windows 7 OS saw the Windows and Windows Live Division drop revenue of 1% in the period; this despite sales of PCs in general rising. While this isn’t a large negative for the company, it does suggest that some users are opting to wait for the highly anticipated Windows 8 rather than purchase Windows 7 now.
Unfortunately, it wasn’t all good news for Microsoft. While it’s Online Services Division saw revenue growth of 17%, it lost $728 million on revenue of just $662 million. This largely can attributed to the failure of Bing to capture significant market share against Google’s juggernaut, despite high profile partnerships with companies such as Baidu. Microsoft will surely be looking to the deeper integration of Bing into Xbox Live as a way of curing this ailment long term. Xbox users can expect this function to be available in the Fall update.
With Apple and Google recently announcing equally impressive revenue figures, it appears that technology companies are weathering the economic downturn better than many other sectors.
Ranters, do you believe that Kinect can continue selling so well, or will it struggle without key titles?