Xbox was another high spot. Xbox was the top-selling gaming console in the U.S. for the ninth consecutive month, Microsoft says. The Gears of War 3 game sold over three million copies in the first week, although this didn't compare to the success of Halo Reach, which was released in the year-ago period and earned $200 million on its first day. Microsoft also took on the Roku and Boxee consoles of the world when it announced plans to roll out TV entertainment on Xbox LIVE starting this holiday season with about 40 content providers.
In all, Microsoft shipped 2.3 million Xbox 360 consoles in the quarter, compared to 2.8 million in the year-ago period. The Entertainment and Devices Division garnered $1.96 billion in revenue, a 9% increase. Interestingly, this unit is where income from royalties on its Android license agreements is credited, said Klein.
There were brown spots. The tablet has all but killed netbooks, Klein said, admitting to “some cannibalization of netbooks” when reporting the results of the Windows and Windows Live Division. Revenue was $4.87 billion, a mere 2% increase over the prior period, again, hurt by soft netbook sales. Note that Apple sold 11.1 million iPads during this period – a record for the tablet.
Analysts say that about 91.8 million PCs total were shipped in the period. Windows PC sales to enterprises grew at about 5% while sales of PCs to consumers were flat, Microsoft says. Klein believes that the company is in the “middle innings” of Windows 7 adoption in the enterprise. Windows 7 now accounts for about 50% of all Windows users, according to Statcounter. Microsoft said that Windows 7 licenses have reached 450 million since its launch.
The perennial weak spot of Microsoft's Online Services Division remained so. The unit lost $494 million which was less money than it lost in the year-ago quarter, at $558 million. Microsoft says that Bing now owns 15% of the search market and this includes the boost it got from becoming Yahoo's search engine. Speculation that Microsoft will still buy Yahoo never seems to die, but saying Microsoft was “lucky” that the deal fell through in 2008.