Microsoft still searching for an answer

Microsoft's Q2 results are a bit of a mixed bag. Although Windows sales were $300m lower than expected, sales at its Business Division (Office) were up 24% at $6bn and sales at its Entertainment and Services division were up 55%, mainly on the back of 8 million Kinect sales. While the growth on the

Microsoft's Q2 results are a bit of a mixed bag. Although Windows sales were $300m lower than expected, sales at its Business Division (Office) were up 24% at $6bn and sales at its Entertainment and Services division were up 55%, mainly on the back of 8 million Kinect sales.

While the growth on the gaming side is a cause for celebration, the drop in Windows sales shows how tightly Microsoft's fate is aligned to the PC market. The company didn't break out any information about Windows Phone 7, which is viewed by some as a critical component in a future where mobile devices will play a much bigger role.

Elsewhere, the Online Services business, which includes Bing, lost $543m. To date, Microsoft has lost more than $6bn over the past five years, raising the question of just how much money it is prepared to keep throwing at its Google-basher before it decides something needs to be changed.

Whether CEO Steve Ballmer, who often comes across as wedded to Windows and the PC platform, is the best man to take the company forward is a moot point. The Q2 results should provide food for thought for those who are sceptical that he is.

This was first published in January 2011

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