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Microsoft credits Vista and Halo 3 for strong fiscal Q1 2008 performance
Microsoft sees its fastest Q1 since 1999

We've heard from three major tech companies regarding third quarter performance over the past two weeks. Intel and Apple were both up, while AMD reported its third straight quarter of losses.

Today, it's Microsoft's turn and its results for fiscal Q1 2008 were quite impressive. The Redmond, Washington-based company recorded operating income of $5.92 billion USD and net income of $4.2 billion USD on revenues of $13.76 billion USD. Microsoft's revenue for Q1 represented a 27 percent increase from fiscal Q1 2007 and marks its best fiscal Q1 performance since 1999.

"This fiscal year is off to an outstanding start with the fastest revenue growth of any first quarter since 1999," said Microsoft CFO Chris Liddell. "Operating income growth of over 30% also reflects our ability to translate revenue into profits while making strategic investments for the future."

Not surprisingly, Microsoft also attributed a good portion of its growth to the success of Windows Vista which launched in late November 2006 for OEMs and late January 2007 for consumers.

"Customer demand for Windows Vista this quarter continued to build with double-digit growth in multi-year agreements by businesses and with the vast majority of consumers purchasing premium editions," said Kevin Johnson, remarked Microsoft Platform and Services Division at Microsoft President Kevin Johnson.

On a division-specific basis, Microsoft's Client, Server and Tools, Business, Online Service and Entertainment and Devices divisions reported Q1 2008 revenue growth of 25 percent, 16 percent, 20 percent, 25 percent and 91 percent respectively compared to fiscal Q1 2007.

The big jump in the Entertainment and Devices division can be attributed to none other than Halo 3. Halo 3 generated $170 million USD within a 24-hour period and raked in over $300 million USD during its opening week.

The release of Halo 3 also allowed Microsoft's Xbox 360 to outsell Nintendo's Wii console for the first time during the month of September. The company managed to move 527,000 Xbox 360s during September compared to 501,000 Wiis. This marks a dramatic improvement from the Xbox 360's August numbers of 276,000 units -- itself a big jump from July's tally of 170,000 units.

Halo 3's release was so profound that Hollywood blamed that lackluster box office debut of The Heartbreak Kid on Master Chief's third adventure.

Halo 3's financial impact was also enough to lift Microsoft's Entertainment and Devices division from a loss of $142 million USD during fiscal Q1 2007 to a $165 million USD profit.

Thanks to Microsoft's strong fiscal Q1 2008 performance, it's raising its outlook for fiscal 2008 performance. Its revenue forecasts are being adjusted from the $57.3 billion USD to $59.2 billion USD range. Operating income forecasts are also being raised to $23.5 billion USD from $22.45 billion USD.

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By helios220 on 10/26/2007 10:13:03 AM , Rating: 1
While I won't speak much for Halo (since we have seen many willing to shell out over a $100 for a game and a cat-helmet), I think Microsoft could probably boost sales on Vista quite a bit if they simply priced it more reasonably.

Granted, I'm no a market expert (just a lowly Engineer) and there is some precedent but given the long battle Microsoft has faced with piracy and alternative (open source, *nix based) OS's some of these prices are a hard pill to swallow.

$319 For Vista Ultimate (Retail)? 249 just for the upgrade? Sure, you can get system builder OEM versions or watered down versions of the OS for cheaper, but it's sometimes a tough decision to upgrade from XP in the first place even before you start pulling out features.

Personally, I don't think Vista is a horrible OS, but the technical merits of Vista aren't what were holding me back from the upgrade, it's the price plain and simple for me.

RE: Eh
By Spivonious on 10/26/2007 10:23:55 AM , Rating: 2
I think most Vista sales have happened in the OEM market, hence the reason why those prices are much more reasonable.

And if you think about how long you're going to use Vista for, the price comes to about 17 cents a day for the next 5 years.

RE: Eh
By Master Kenobi on 10/26/2007 10:41:19 AM , Rating: 3
17 cents a day for 5 years. We pay more for a copy of a PS3 or X360 title.

RE: Eh
By GreenyMP on 10/26/07, Rating: -1
RE: Eh
By darkpaw on 10/26/2007 12:08:24 PM , Rating: 2
I'm pretty sure he's referring to the cost/time of use. Those game titles are not going to be useful for 5 years. Average games might give a months use. Maybe a year or a bit more for the best online games.

RE: Eh
By StevoLincolnite on 10/26/2007 2:05:49 PM , Rating: 2
I wouldn't say that, I bought StarCraft In November of 1998 for $89.95 Australian, and it has lasted me to this very day, I usually play on a few hours every night, unless its the weekend, and... Gasp! 9 years almost! :/
Mind you not all games have that kind of re-playability.

RE: Eh
By darkpaw on 10/26/2007 2:11:43 PM , Rating: 3
That is exactly why I used the word average. There are obvious exceptions. Some games never really get old, but they are the rarest of the rare. I never was a bit StarCraft fan, but I know the feeling with other games.

RE: Eh
By sviola on 10/26/2007 12:10:28 PM , Rating: 2
I think you should review those numbers: a PS3 or xbox title don't last 5 years (well, the media might, but you won't be playing it that much)... You should considerer how long the game takes to complete and replayability:

$60 / (20 hours to complete + 100 hours of replay) = 50c/hour

Now considering that Vista would have about an average 2 hours per usage during 5 years:

$320 /(365*2*5) = 8c/hour

So, a game is more expensive.

RE: Eh
By helios220 on 10/26/2007 10:54:23 AM , Rating: 2
True, the vast majority of consumers are not going to be DIY system builders. For those of us who do build and equip their own PCs, the options are somewhat frustrating.

The license that you get when you buy the OEM System Builder software is very limiting, you get little to no support, no alternate media, you get either the 32-bit or 64-bit version (not both like in some of the retail versions), and the license is non-transferable among other things. The system is designed to make the PC reseller handle all of these issues (Dell, etc.) but for the home builder that means you are on your own.

All and all, Vista isn't the biggest rip-off ever but the price still seems inflated to me witch makes alternative operating systems or alternatives such as piracy more attractive to some.

In the end though, I guess it's all kind of a moot point since it is true that the largest user base for Vista will be the pre-installed end-users of retail computers who don't have much of a choice in which OS they get with their PC.

RE: Eh
By Master Kenobi on 10/26/2007 11:36:17 AM , Rating: 2
The largest install base is Corporate users. Most corporations will be migrading to Vista during 2008 or 2009. We just don't move fast enough to be able to upgrade large infrastructures to a new OS on the drop of a dime.

RE: Eh
By omnicronx on 11/7/2007 10:08:13 AM , Rating: 2
Who needs vista ultimate anyways? Home premium is more than enough for most people.

Video game division profitable?!
By Brockway on 10/26/2007 9:50:39 AM , Rating: 2
So Microsoft's entertainment division is finally profitable? Only took them like 7 years, but they've finally done it I guess.

RE: Video game division profitable?!
By inperfectdarkness on 10/26/07, Rating: -1
RE: Video game division profitable?!
By Locutus465 on 10/26/2007 10:26:13 AM , Rating: 3
Some might say that rather than bullying console customers, Microsoft put together a great little console with a well designed end user experince combined with great products and services... What is wrong with that?

RE: Video game division profitable?!
By RjBass on 10/26/2007 10:46:25 AM , Rating: 2
agreed ^^

RE: Video game division profitable?!
By hr824 on 10/26/2007 11:04:21 AM , Rating: 2
I agree as well....when it's not in transit to or from the repair center.

By Locutus465 on 10/26/2007 11:30:26 AM , Rating: 2
I can imagine that for the next gen console the boys in redmond are going to be complete QA nazi's (my 360 is on it's way to Houston right now :(). That's the acheles heal of the 360, poor QA work...

It's worth noting though, that my console didn't RROD (when I uses this I think self destruct due to heat to the point of no operation other than lights). Mine just puts up a single red light, throws out E 74 and tells me there's a hardware issue in 10 different languages, so lord only knows what is wrong with it (tried removing all but composit inputs and it still didn't work). Perhaps the DVD drive croaked, it did start making weird noises associated with the optical drive ::sigh::

RE: Video game division profitable?!
By yost007 on 10/26/2007 12:30:38 PM , Rating: 2
TextSome might say that rather than bullying console customers, Microsoft put together a great little console with a well designed end user experince combined with great products and services...

Well put, aside from the quality issues (which have been resolved) they have built a great console. I love my 360 (I got it on launch day). It used to freeze up once in awhile but that went away after the first system update.

And I use mine about 3 hours a day or more if my son watches movies. Just for good measure though I keep a fan blowing on it at all times when it is in use though. LOL

By Locutus465 on 10/26/2007 1:34:49 PM , Rating: 2
I'm curious what the current stats are... I have an HDMI premium that, while it didn't RROD, it did spit out "E 74" and basically died... I hope that (Unlike nintendo with my Wii) they actually tell me what went wrong.

By SavagePotato on 10/26/2007 11:05:23 AM , Rating: 3
Balmer really looks like some kind of creature from Doom3.

Just photoshop his face red and add some horns and that about does it.

RE: Balmer
By GreenyMP on 10/26/2007 11:47:52 AM , Rating: 2
I think he might have some Mauri ancestors.

RE: Balmer
By TomZ on 10/26/2007 11:42:36 PM , Rating: 2
Yeah, I see what you mean:

I saw a Maori show last time I was in New Zealand, so I knew just what you meant. :o)

RE: Balmer
By Captain Orgazmo on 10/27/2007 4:38:19 PM , Rating: 2
My first impression of the pic was "Jabba the Hut!"

RE: Balmer
By GaryJohnson on 10/27/2007 10:42:49 PM , Rating: 2
RE: Balmer
By vadimur on 10/29/2007 9:33:47 AM , Rating: 2
I thought he looked like some kind of reptile or lizard man.

Brandon needs coffee or do I?
By Mitch101 on 10/26/2007 9:39:27 AM , Rating: 1
Halo 3 was in Q3?
Many references to Q1 should probably read Q3.

Brandon did you switch to Decaf? Im still sipping mine so Im not responsible for commenting before 10:00am.

RE: Brandon needs coffee or do I?
By bl4ckfl4g on 10/26/2007 9:42:41 AM , Rating: 2
Fiscal Year Q1

RE: Brandon needs coffee or do I?
By Mitch101 on 10/26/2007 9:44:33 AM , Rating: 1
Coffee is kicking in now. Your posting Q1 when they are talking about 1Q which is Q3 to the rest of us.

This is Jessica Mintz fault.

RE: Brandon needs coffee or do I?
By RjBass on 10/26/2007 10:44:06 AM , Rating: 2
So confusing. lol

Customer Demand?
By yost007 on 10/26/2007 10:53:48 AM , Rating: 3
More like sales of pc's must be doing well. In most cases you only have one choice of operating system. I bought a new laptop 3 weeks ago. Vista of course in installed. It is fine and all but what a resource hog. Oh and then I found out that if I installed XP on it it would void my warranty.

This thing has a C2 Duo T7200 w/2 GB's ram and runs Corel X at the same speed as my 3 year old 3.2 P4 with 1 GB ram.

But my biggest gripe with Vista . That damn dialog box that pops up saying "You have blocked startup programs", Ugh.

Anyways congrats to Microsoft for finally making a profit in their entertainment division.

RE: Customer Demand?
By Ringold on 10/26/2007 8:50:52 PM , Rating: 2
I fixed that... but not sure how. All that did it to me was BOINC, and I believe installing it as a service did the trick, but can't recall now.

As for performance, eh, I don't buy that. It should easily outbenchmark the old power-hog. A X2 3800+ 2GB box I put Vista on saw only gaming performance degradation -- and if I bothered to stick on 7.10's that might fix it, but too lazy. Vista gives up a lot of the RAM it caches when apps desire it and it's background processes eat virtually no CPU time -- like every other OS.

Forward looking
By crystal clear on 10/27/2007 1:49:11 PM , Rating: 2
Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

( I quote a few)

the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;

actual or perceived security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;

government litigation and regulation affecting how Microsoft designs and markets its products;

Microsoft’s ability to attract and retain talented employees;

delays in product development and related product release schedules;

adverse results in legal disputes;

Microsoft’s consumer hardware products may experience quality or supply problems;

By v1001 on 10/26/2007 10:53:55 AM , Rating: 1
M$ stock is up over 11% right now. Geez wish I got in on that.

About Vista:
By gochichi on 11/11/2007 9:01:07 PM , Rating: 1
I think they are doing masterful planning with Vista. They are running a super tight ship when it comes to money making. I think the price of Vista is appropriate and coming down with some incentives at times ($50-$75 gift certificates) and such. It promotes hardware sales.

I also think that the Apple surge is only guaranteed to make Microsoft even more money. Apple has done the impossible: It has taken computers out of the $500 price range gutter. Apples run Windows, and Microsoft Office. When MS Office 2008 for Mac comes out, they are going to be swooshing in even more money. Basically, MS is still at the forefront of proprietary software, any proprietary system (and certainly a Mac) will run to MS for software.

I think it's very clever, I also think it's very clever to bundle Media Center capabilities as this one of the only areas where I can say my computer today allows me to do something that my old computer didn't. Certainly, recording and playing HD video on Media Center is something that I can't help but see "Microsoft" on. Just like MP3 player you think Apple.

I think it makes a whole lot of sense for Microsoft to keep their release cycles to every 5 years or less... but this is Microsoft, they really don't make a whole lot of mistakes. They don't innovate but they market with precision. And they let hardware vendors help them out. (Thinking NVIDIA, ATI, and INTEL).

One thing Microsoft is wrong about:
By gochichi on 11/11/2007 9:11:32 PM , Rating: 1
Putting Ballmer's crazy-ugly and tactless face at the top of the company. I do think that keeping Bill Gates as the "face" even if he's not around that much would have made more sense.

How come I can't get into Halo 3? I think I'm too old probably. :(

Customer Demand?
By yost007 on 10/26/07, Rating: -1
RE: Customer Demand?
By darkpaw on 10/26/2007 10:34:02 AM , Rating: 2
What MFG would actually void your warranty for changing the OS?

I've heard of not offering tech support for an alternate OS, which is understandable. I don't see any way they could legitimately void the warranty though.

RE: Customer Demand?
By Ihmemies on 10/26/2007 10:52:44 AM , Rating: 2
The "blocked startup program" box comes, if you have UAC enabled (you can disable it easily), and there are programs requiring adminstrator rights which run when window starts.

The issue (that a program needs adminstrator rights) can be avoided with better coding, but some developers are just too lazy or don't think that changing their program Vista (UAC) compatible is worth the effort.

I've been waiting Vista-compatible version of Admuncher for 8 months. It's the only program which refuses to work properly without adminstrator rights.

RE: Customer Demand?
By Master Kenobi on 10/26/2007 11:39:50 AM , Rating: 2
You can also go in and actually modify the autorun string for that application so its allowed to run rather than get the popup each time..... It pops up to tell you it blocked something, you can modify it to allow that program to execute.

RE: Customer Demand?
By gramboh on 10/26/2007 12:52:16 PM , Rating: 3
My GF bought a Dell notebook with a Core 2 1.83GHz cpu, 2GB ram, 120GB 7200rpm HDD which came with Vista Home Premium. It runs pretty damn smoothly for desktop/office type use. It honestly doesn't feel much slower than my desktop (Core 2 @ 3.3GHz, 4GB DDR2, Vista x64).

UAC is a GOOD thing for security! Again, it is applications requiring root privledges which they often don't need that cause the pop-ups to happen a lot. Use task scheduled to auto-run stuff you trust on boot and then email developers to complain about stuff requiring root priv that shouldn't.

RE: Customer Demand?
By yost007 on 10/26/2007 1:25:01 PM , Rating: 2
My GF bought a Dell notebook with a Core 2 1.83GHz cpu, 2GB ram, 120GB 7200rpm HDD which came with Vista Home Premium

My sister bought a Dell with AMD T56 or 58 and 2GB of ram (Mine has a C2D T7200). The weird thing is that when we compared our Windows Vista Advisor Ratings, hers was a 5.9 for ram and mine was only 4.1. This is strange because we have the same type and amount of ram.

Also in task manger her memory usage hover around 750 and mine is 930mb. We have the same anti-virus software. Plus after memory allocations for installed devices my pc acutally has 74mb (2032 total) more installed ram as stated in the control panel.

There must be other programs running in the background that are affecting its resources that I am unaware of, but the largest uses are msn at 84mb then dwn.exe at 57mb.

But for the most part it is pretty peppy at most things (Except for booting-up it takes about 4 minutes).

RE: Customer Demand?
By Master Kenobi on 10/26/07, Rating: 0
RE: Customer Demand?
By GreenyMP on 10/26/2007 11:38:40 AM , Rating: 5
A P4 desktop processor 3.2GHz is faster than a 2.0 or 2.16 GHz processor.

Completely true if when you say faster you mean faster at pushing operations through the pipeline. But what you infer is that the P4 at 3.2GHz will out-perform the Core 2 Duo at 2GHz. And that is just not true.

You could probably find one benchmark of some random application that shows the P4 3.2 outperforming the Core 2 Duo at 2GHz. But for the most part the Core 2 Duo will have a 20-30% performance advantage.

The rest of your argument is sound. Bus speeds, memory speeds, and graphics processors on laptops will typically eat up a 20-30% performance advantage in a hurry.

RE: Customer Demand?
By afkrotch on 10/28/2007 10:42:52 PM , Rating: 2
I think you missed part of his post or something, if you think it's sound.

His stupid arguement about the P4's hyperthreading. Sure HT is great an all, but a single core P4 with HT isn't going to work better than dual cores.

Anyways, some benches. (has the Athlon X2 3800+ beating a bunch of Pentium Ds)
(has the mobile Core Duo matching the desktop Athlon X2 3800+) (has the mobile Core 2 Duo beating the mobile Core Duo)

So far what all those tests show is....

Mobile Core 2 Duo > Mobile Core Duo = Desktop Athlon 64 X2 3800+ > Pentium D

I couldn't find a benchmark showing the Pentium D being better than the regular Pentiums, but I don't think I really need to bother doing that.

RE: Customer Demand?
By yost007 on 10/26/2007 11:55:40 AM , Rating: 2
No. You would void software support by your PC manufacturer, but the hardware is still under warranty. Nice try though

Thats what a tech told me anyway when I called them to ask about installing XP. I thought it was odd that he would tell me that. Maybe it was a misunderstanding but it was hard to understand him anyway due to the heavy Indian accent. What was I trying to do anyway?

That Core 2 Duo chip is also running at 2.0 or 2.16 GHz, which is much slower than your old P4.

I was just expecting it to be on par with my old machine. When I benchmarked the 2 machines with SisSoft the laptop processor beat my old P4 by more than 240%. I was actually shocked by this score. But I did not buy this to replace my desktop. I just needed a new toy for when I am away from home.

RE: Customer Demand?
By Setsunayaki on 10/28/2007 5:24:45 PM , Rating: 1
The thing about the whole issue is coercion.

In this house we have 12 computers....At one point we tested Vista out and we hated it. We have all been using windows XP.

I walk through computer science labs and research centers. I know we just all read that Microsoft is doing well...The reality is that companies will lie in their records and pay off other companies to lie.

The reality is that at times I work fixing computers from those who ask me to fix them for money. In the last 6 months the only place I have actually seen a copy of Windows Vista are in stores like Microcenter. Everywhere else...I see XP.....

Halo is what helped microsoft this time around....Customers smartened up and DEMANDED OEMs to sell comps with XP. This is the first time a new OS is released and people demand the old version to the point that Microsoft tried to Phaze out XP and failed miserably.

That Core 2 Duo chip is also running at 2.0 or 2.16 GHz, which is much slower than your old P4.

A processor's raw performance is based on Integer and Floating Point Performance values. You have ALU and FPU performance...

You also have a second core helping you out. The Core 2 processors truly beat out anything than Intel has...I mean...they had to.....and had no choice in delivering a better product for if they did not make something better than Pentium 4s, AMD would be still selling their athlon 64s like hotcakes...

RE: Customer Demand?
By SavagePotato on 10/29/2007 9:39:42 AM , Rating: 2
Yes I realy think Microsoft has completely fabricated their financial results for the quarter. Since im pretty sure that would constitute fraud I can totaly see why they would just make up some number to make Vista look better.

Or maybe you are talking nonsense and haven't got a clue.

Take your pick on which is more likely.

The reason companies like dell started offering XP again is indeed due to consumer demand, but it has nothing to do with being smart. It has everything to do with being afraid of change and buying into false press.

I'm not sure where you work but I work for a very small isp and also do computer repair, and I see tons of vista systems, in a fairly small population center I might add.

Funny story, there was a customer that purchased a toshiba laptop a couple months back. He came back just livid about vista, claiming it was the most horrible thing ever. I forwarded him to the sales manager and sugguested he exhange for an XP laptop if he wasn't happy and never gave it another thought. The other day the guy came back in for something and turns out he ended up keeping vista, his response was now that he's spent some time with it he realised it is in fact quite good, and loves the Vista system.

That situation is what 99% of Vista dislike situations boil down to. "It's different and I feel stupid cause I don't know how to use it so XP is better, beacause I know how to use it and that makes me feel intelligent". People do not like having their lack of knowlege exposed changing things around tends to do that, and that makes them upset.

By yodataco on 10/26/07, Rating: -1
RE: yea...
By rtk on 10/26/2007 11:33:26 AM , Rating: 5
yes, of course. they made billions off the 170 million Halo 3 brought in.

Sorry bud, time to dream up another "end of ms as we know it" theory, vista is doing very well.

Apple only wishes they could have 88 million users in less than a year.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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