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Windows' share of Microsoft sales falls to four-year low

Gregg Keizer | Oct. 22, 2012
The Windows division's share of Microsoft's revenue last quarter dropped to a four-year low as Windows 7 sales stalled before the launch of Windows 8, financial data released by Microsoft yesterday showed.

Microsoft launches Windows 8, its tablet-centric spin-off Windows RT, and the Surface RT, its first attempt at designing and manufacturing a tablet-style PC, next Friday, Oct. 26.

Koefoed also argued that the shift to Windows 8 would divorce Microsoft from its dependence on traditional PC sales, the biggest reason why, as those sales stagnate and even decline, the Windows division has under-performed.

"We have discontinued the bridge to the PC market as Windows 8 will be a platform across a broad set a form factors," Koefoed claimed.

But that shift will be slow, said Alan Krans, an analyst with Technology Business Research.

"High growth from the operating system will not initially be apparent," Krans wrote in a note to clients yesterday. "Success and continued use of prior operating systems, including Windows XP and Windows 7, will cause a delay in initial adoption of Windows 8 in enterprises. Widespread adoption within enterprise customers will likely come within the first two years on the market as Windows 7 matures."

Microsoft's best shot at boosting Windows sales, Krans continued, will be in the consumer market. "Where Microsoft will see the largest near-term growth will be in the consumer space, with mobile device and tablet users being the first to heavily adopt the operating system," Krans said.

The other money-making divisions of Microsoft -- Business, which handles the Office suite, and Server and Tools -- again beat Windows in sales last quarter.

The Business group generated $5.5 billion, while Server and Tools did $4.6 billion. While the Business group was down 2% -- in part, like Windows, because of $189 million in deferred sales to account for the Office 2013 upgrade program that kicked off today -- Server & Tools was up 8% year-over-year.

The Business division accounted for 34.4% of all revenue; Server and Tools produced 28.4%.

Windows' sales last quarter dropped to four-year low as a percentage of Microsoft revenue. (Data: Microsoft.)



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