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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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Eh
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 (blog) 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 Battle.net 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 (blog) 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.


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