Microsoft's revenue for the final quarter of 2011 reached a record $20.9 billion -- up 5 percent, or $900 million, in comparison with the year-earlier period, according to the software giant. The company also remains upbeat about its prospects in 2012.
"Coming out of the Consumer Electronics Show, we're seeing very positive reviews for our new phones and PCs," said Microsoft CEO Steve Ballmer. He also referred "to a strong response" at CES "to our new Metro-style design that will unify consumer experiences across our phones, PCs, tablets, and television in 2012."
Though the PC market overall was challenging for Microsoft during the final quarter of 2011, the software giant saw strong demand for its business products and services, as well as the company's Xbox 360 entertainment platform.
"This holiday season was the strongest in Microsoft history, thanks to good sales execution and compelling products like Xbox 360 and Kinect," said Microsoft Chief Operating Officer Kevin Turner.
According to Gartner, PC sales overall fell 1.4 percent in 2011's seasonally strong fourth quarter, while Microsoft pegged the decline at 2 percent to 4 percent. Among other things, record floods in Thailand had an impact on the delivery of hard disk drives to PC OEMs, they said.
Nevertheless, Microsoft executives continued to see strong demand for the company's business products and services. "We delivered record earnings per share by continuing to manage our costs while investing for future growth," said Microsoft CFO Peter Klein.
Windows 7 Enterprise Strength
Microsoft's executives as well as Gartner's analysts noted that other computing form factors took a bite out of global PC sales during the fourth quarter.
"We only have a very rough estimate for mini-notebooks -- also known as netbooks -- but expect that their share of the mobile PC [segment in the fourth quarter of 2011 were] down to around 10 percent, compared to 15 percent in the fourth quarter of 2010," said Mika Kitagawa, a principal analyst at Gartner.
The growing popularity of tablets and smartphone also had an impact on PC sales in last year's fourth quarter. "There are more options for consumers, [and] more consumers in mature markets own PCs which are relatively new," Kitagawa explained in an e-mail Friday.
On the other hand, Windows 7 sales in the enterprise space remained robust in the fourth quarter -- with the Windows 7 OS now running on more than 33 percent of enterprise desktops worldwide, Microsoft executives said. What's more, Net Applications currently pegs the global PC market share held by Windows 7 at 37 percent, compared with 46.5 percent for Windows XP.
"We have now sold 525 million Windows 7 licenses since launch," said Bill Koefoed, Microsoft's general manager of investor relations.
Windows 8 Benefits
Looking ahead, Microsoft envisions business PC growth outpacing consumer PC growth over coming quarters. Overall, the software giant also expects the sales it generates in emerging markets such as Brazil, Russia, India and China to continue to outpace the company's sales growth in developed markets.
"In terms of PCs, as we said, there's still growth and we're still in the refresh cycle," Klein said.
Microsoft announced last month that the beta release of Windows 8 would be available in late February, and also previewed its coming Windows Store, which will serve as the hub where users will be able to discover and download the latest applications.
"With the future release of Windows 8, we believe the ecosystem will benefit from the new range of capabilities and scenarios that it enables," Klein said. "We are well positioned for future growth."
Though any Windows 7 machine will be able to run Windows 8, Koefoed told investors, "obviously there'll be some new and interesting form factors that are going to come out as we get further on down the road."