Microsoft Posts Record Revenue — but Xbox Is Slipping

Microsoft reported record revenues of $17.41 billion for the past quarter, but profits slipped 2.4% from the same period a year earlier, down from $5.23 billion to $5.11 billion.

PC sales were sluggish due to the twin pressures of a hard-disk shortage brought on by flooding in parts of Asia and the ongoing shift from traditional computers to mobile devices such as tablets.

Microsoft’s tablet strategy won’t be fully realized until the fall, when Windows tablets are expected to debut alongside the company’s new PC operating system, Windows 8.

Microsoft also took a hit in its Xbox division, with revenues dropping 16%, which Microsoft blames on a soft game console market. Nonetheless, the company remains upbeat about the Xbox platform, pointing out it’s currently the market leader, and has been for more than a year.

“We’ve really staked out a unique value proposition,” said Microsoft CFO Peter Klein on an earnings call. “We view Xbox Live as a persistent long-term revenue stream. We feel great about out leadership position.”

The good news was from the company’s business-oriented products, like Office 365, Lync and Sharepoint, and there was double-digit revenue growth in those areas. Microsoft attributes its growing strength in the enterprise market to its unique offerings, particularly with cloud services.

“Businesses are investing in data centers and desktops because the see technology as a way to cut costs and improve their strategic positioning,” said Klein.

“I think investors sometimes put companies in a box and say you’re either in private cloud or public cloud, and we’re in both,” added Bill Koefoed, Microsoft’s general manager of investor relations.

“We’re really the only company that’s got that breadth of offerings. We’ve kind of coined this term ‘hybrid IT,’ where you can use both to manage your IT infrastructure.”

Microsoft said it was also trying to bring its growing Windows Phone platform to more people, particularly with the recent high-profile launches of the Nokia Lumia 900 and HTC Titan II.

In the past three months, the number of apps in the Windows Phone Marketplace has doubled, Microsoft said — though it didn’t give a total number.

What kind of future do you see for Microsoft and its brands? Let me know in the comments.

Reference: http://on.mash.to/JpgR7b

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Mobile Operators: Lumia Can’t Compete With iPhone and Android

Several mobile operators don’t think Nokia’s Windows Phone-based Lumia smartphone is good enough to compete with Apple’s iPhone and Android smartphones, Reuters reports, citing sources in four major telecoms.

These sources blame high price (for a product that they say is not innovative), poor marketing and recent software glitches for the lack of customer interest in the Lumias.

“No one comes into the store and asks for a Windows phone,” said one executive in charge of mobile devices at a European operator.

In our review of the Lumia 900, we’ve found the device to be the best Windows Phone we’ve encountered. With strong competition from Android and iOS, both of which offer more apps to consumers, one has to wonder whether that’s enough — and some mobile operators don’t think so.

“If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell,” said one of Reuters’ sources.

Nokia put all its chips into the deal with Microsoft, so there isn’t much it can do about this except try its hardest to build the best possible devices and aggressively promote them. The question is: Could mobile operators themselves do more to promote the Lumias?

What do you think? Are Nokia’s Lumia devices really inferior to Android phones and the iPhone? Sound off in the comments.

Reference: http://on.mash.to/HZmcCm

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Microsoft Is Writing Checks to Fill Out Its App Store

Nowadays, cellphones are all about apps. And Microsoft is so determined to have lots of brand-name apps for its Windows Phone app store that it is willing to pay for them.

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All an app maker has to do is sign on the dotted line.

After years of struggling in the phone market, Microsoft teamed up with Nokia last year to challenge the dominance of Apple’s iPhone and Google [GOOG  632.32    -2.83  (-0.45%)   ], which makes the Android operating system. The latest fruit of their collaboration is a gleaming machine called the Lumia 900, which goes on sale in the United States on Sunday and is considered to be the first true test of how well the partnership will fare.

But the hundreds of thousands of apps that run on Apple [AAPL  633.68    9.37 (+1.5%)   \] and Android devices will not work on phones like the Lumia 900 that use Microsoft’s Windows Phone software. And many developers are reluctant to funnel time and money into an app for what is still a small and unproved market. So Microsoft has come up with incentives, like plying developers with free phones and the promise of prime spots in its app store and in Windows Phone advertising.

It is even going so far as to finance the development of Windows Phone versions of well-known apps — something that app makers estimate would otherwise cost them anywhere from $60,000 to $600,000, depending on the complexity of the app. The tactic underscores the strong positions of Google and Apple, neither of which have to pay developers to make apps.

When Microsoft [MSFT  31.52    0.31  (+0.99%)   ] offered to underwrite a Windows Phone version of Foursquare, the mobile social network, Holger Luedorf, Foursquare’s head of business development, did not hesitate to say yes.

“We have very limited resources, and we have to put them toward the platforms with the biggest bang for our buck,” he said. “But we are a social network and it is incredibly important for us to be available on every platform.”

Foursquare has in-house engineers working on iPhone, Android and BlackBerry versions of its service. But had Microsoft not offered to pay an outside company to do the work, Mr. Luedorf said Foursquare would “probably not” have developed an app for Windows Phone.

Ben Huh, chief executive of the Cheezburger Network, a collection of humor and entertainment sites, said Microsoft’s market share was too small to warrant in-house development of a Windows Phone app. But when Microsoft approached his company about making an application featuring funny photos of cats, he agreed. “They made it very easy for us,” he said. “They took care of everything.”

Casey McGee, senior marketing manager for Windows Phone at Microsoft, confirmed that the company offered an array of incentives for developers, but he declined to name the apps Microsoft had financed.

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