(WEB HOST INDUSTRY REVIEW) — With the recent release of its quarterly results, Microsoft (www.microsoft.com) has re-established itself as a force with which to be reckoned, earning $4.52 billion, compared to Apple’s $3.25 billion and Google’s $1.8 billion.
One of the main sectors driving this growth has been Microsoft Server and Tools product and service offerings, which include Windows Server, Microsoft SQL Server, Windows Azure and other cloud and server offerings. According to Microsoft’s earnings report released last week, for the twelve month period that ended June 30, Server and Tools revenue grew by 5 percent and operating income by 14 percent.
Compared to the same quarter last year, Server and Tools revenue increased, reflecting growth in product and enterprise services revenue. Product revenue increased $463 million or 17 percent, and was driven primarily by growth in Windows Server, SQL Server and Enterprise Client Access License Suites revenue. This seems to reflect the good general health of Windows platform applications. Enterprise services revenue grew $21 million or 3 percent, primarily due to growth in premier product support services, offset in part by decreased consulting services.
Approximately half of Server and Tools revenue comes from annuity volume licensing agreements, and about 30-percent is purchased through transactional volume licensing programs, retail packaged product and licenses sold to OEMs, and the remainder comes from enterprise services.
According to the report, Server and Tools operating income increased primarily due to revenue growth, however, growth gains were partly offset by increases in operating expenses.
Over the past 12 months, Server and Tools revenue increased mainly through growth in product revenue. Product revenue increased $652 million or 6 percent, driven primarily by growth in Windows Server, SQL Server and Enterprise CAL Suites revenue. The increased revenue (from annuity volume licensing agreements and continued adoption of Windows platform applications) was partially offset by a decline in developer tools revenue. Enterprise services revenue was relatively flat — with growth in premier product support services being nearly offset by consulting services losses.
Despite the cost of revenue increasing by $25 million, Server and Tools operating income increased due mainly to revenue growth, and reduced research and development expenses, which was primarily driven by reduced third-party development and programming costs and headcount-related expenses. Research and development expenses decreased $38 million or 2 percent, while hosting, localization and lab costs increased.
“We saw strong sales execution across all of our businesses, particularly in the enterprise with Windows 7 and Office 2010,” Microsoft chief operating officer Kevin Turner stated. “Our transition to cloud services is well underway with offerings like Windows Azure and our Business Productivity Online Services, and we look forward to continuing our product momentum this fall with the upcoming launches of Windows Phone 7 and Xbox Kinect.”
Earlier this month at Microsoft’s Worldwide Partner Conference 2010, Server & Tools president Bob Muglia announced that the Windows Azure platform would be available as an appliance.
“We’ve invested very heavily in building IT as a service with this next generation cloud platform that we call Windows Azure.” Muglia said. “And we are experiencing great interest from so many people, it has been an unbelievable success in the short time it’s been out there… The Windows Azure appliance fundamentally takes the Windows Azure service and extends it…to our service providers, allowing you to run exactly the same capabilities within your data centers, providing that capability to your customers, and it can be extended to our larger customers that want to provide IT as a service within their own organization.”
No related posts.
