Microsoft's profit boost reduced by online losses

Fri 20th of April 2012, filed under Internet News

Windows and Office perform better than Bing

Microsoft's financial performance in the first quarter of 2012 was better than expected - but investors are still concerned that it is unable to compete with Google and Apple in the internet and smartphone markets.

Despite the increased popularity of tablets and other non-PC technology in recent years, Microsoft's profits have shown a surprising upsurge in its Windows operating system, which increased by nearly 4 per cent to $4.6bn (£2.8bn).

Its Office software - including programmes such as Word, Excel, Outlook, Powerpoint and Access - has also done well, rising by 14 per cent as a result of both private purchases and corporate upgrades. Combined, Windows and Office for PCs represented 105 per cent* of the business's profits between January and March [*due to losses elsewhere].

However, these successes were reduced by its mobile software and Bing search engine. Microsoft's Online Services division lost $479m (£297m), compared to $458m (£284m) in the previous quarter - though its performance has improved since the first quarter of 2011, in which its losses were $776m (£482m).

Microsoft beaten by iPhone revenues alone

Following the success of the Windows 7 operating system, which Microsoft credits with its profit jump in that market, there is speculation as to how its system for smartphones will fare.

Kim Forrest, analyst at Fort Pitt Capital Group, said: "Next year at this time we should be talking about Windows 8 mobile and how it's contributing, or not, to the company."

Google remains the undisputed search engine king and the popularity of its Chrome browser is on the rise, while Apple's market value is double that of Microsoft. In Q1 of 2012, revenues from iPhones alone were higher than Microsoft's entire portfolio.

Tom Glass, creative director at theEword, said: "It's strange to think that 10 years ago, Microsoft seemed unbeatable in the realm of computer technology. Now, it is struggling to catch up as Google and Apple race ahead with new innovations in online technology and lifestyle choices."

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