ADOTAS – Windows Phone 7 may have been met with a collective yawn by U.S. consumers, but Microsoft had a pretty nifty second quarter 2011 (fiscal year) and actually brought home more profit than old foe Apple. With record revenue of $19.95 billion, Microsoft took home $6.63 billion in profit, one-upping Apple’s $6 billion.
Give a lot of credit to the Kinect gaming console, which sold 8 million times in 60 days. Oh, it turns out Windows 7 has sold over 300 million copies, earning the title of fastest-selling PC operating system ever. Twenty percent of PCs connected to the Internet are using the OS.
While there was no activation information or sales figures in regards to Windows Phone 7 handsets, the most stunning figure was a $563 million loss in online operating income during the quarter. Or perhaps it wasn’t stunning because such quarterly losses in online operating income have become par for the course.
Begging the question “Has any company lost as much money online as Microsoft?”, Silicon Alley Insider offers a damning chart exhibiting that Microsoft’s online operating income has been in the red for the last five years. The last four quarters show $2.5 billion in losses alone.
But wait, you say, Bing is making serious inroads in the search game, especially with the Yahoo integration! Well, Frank Reed at Marketing Pilgrim replies, “Let’s face it, the only reason Google has any competition at all in search is because Microsoft is willing to lose a lot of money to say they are in the game.” Ouch.
It makes you wonder long Microsoft will keep up the losses, especially as a 30% drop year over year in Windows and Windows Live revenue may spell future trouble with a reliable cash stream. But there are bright spots — first, the losses are declining, and second, Microsoft’s deal with Facebook could seriously turn things around, especially as public annoyance with Google in the search space grows.
As I’ve suggested before, Bing could get lucky and be that social search engine we’ve been waiting for… Or if Bing powers Facebook search, perhaps we’ll just use the social network for search fulfillment.