Microsoft: The Good, the Bad, and the Ugly

NY Times reports that Microsoft has gained money in servers (hurting Oracle, Sun, et al), but continues to bleed money in the Internet services business. Guess which part of the IT market is growing by leaps and bounds? Hint: it's not servers. See below for details.

Microsoft reported solid quarterly results yesterday that slightly surpassed Wall Street expectations, with sales growth driven by its Xbox game business and software for server computers. Both revenue and profit rose 11 percent.

Microsoft’s chief executive, Steven A. Ballmer, says Web sites like MSN give the company an online presence, adding that it has Web initiatives.
Demand for the company’s software for corporate databases and servers grew strongly, with sales up 17 percent, to $2.5 billion. Sales of Xbox game consoles, software and online game subscriptions jumped 70 percent, to more than $1 billion. Those two businesses accounted for most of Microsoft’s revenue growth in the quarter, the first in the company’s 2007 fiscal year.

Microsoft’s Internet services business, which competes with Google, Yahoo and others, continues to struggle. Revenue declined, and the unit lost $136 million.