This page has been archived and commenting is disabled.
Microsoft’s Kinnect Helped Power It To A Record Quarter, Indicating A New Era For Both MSFT & Personal Computing
Last month I said that “The (Very Near) Future of Microsoft Windows Is Here, Now!“,
lamenting on how impressive Microsoft’s new computing and gaming
interface was. For those of you who are not familiar with the Kinnect
technology, I strongly suggest you review the contents behind the link.
It is truly amazing, particularly considering it has already been
hacked onto Windows 7 and individual computer applications for the
“Minority Report” effect.
Well, it appears as if I was correct, for Microsoft has surprised the
investment community once again by posting not on a 5% rise in revenues
but a 55% rise in the revenues of its entertainment divisions – a
division that has been widely known to be a money loser. The Xbox
franchise is arguably the most valuable gaming franchise in the world,
and the Kinnect has lit it on fire. The possibilities for this stuff is
quite significant as it matures and gets refined. Imagine controlling
all of your devices with gestures and voice commands!
Of particular note is the fact that Microsoft’s consumer businesses
are nearly on par with that of their enterprise divisions, approximately
7% in difference (after reversing deferred revenue recognition). This
marks a significant change in Microsoft’s revenue mix, and it is not
going unnoticed. There is no wonder why Microsoft is moving Windows to ARM architecture, to better compete with those guys from Apple and Google.
From Endgadget:
Looks like the rumors were true: Microsoft
has just confirmed that the next major revision of Windows, what we’ll
call Windows 8 for now, will include ARM support. The company also is
throwing a little love to all the system on a chip (SoC)
makers out there, indicating they’ll be getting support out of the box
as well. This is the sort of thing we’ve come to expect from Windows
Embedded, but it’s something new for the company’s flagship product, and
is something of a continued sign that the concept of a “personal computer” is only going to keep changing.
Full details are in the release after the break, but be warned those
details don’t include anything even resembling a date. There are,
however, about a zillion quotes from companies like ARM, which says:
Windows combined with the
scalability of the low-power ARM architecture, the market expertise of
ARM silicon partners and the extensive SoC talent within the broad ARM
ecosystem will enable
innovative platforms to realize the future of computing, ultimately
creating new market opportunities and delivering compelling products to
consumers.
This more than mere marketing and PR fluff. See my thoughts, in detail: The Future of the Mobile Computing Wars: Contiguous Rich Client Computing!
While it is perfectly understandable to want to prevent Apple from
gaining too strong a foothold in the tablet market, I think many vendors
are incapable of seeing the forest due to excess tree bark in their
eyes. Consumers and business users are expected to purchase a
smartphone, desktop, notebook, media player and now a tablet?
Realistically, many of use have replaced the desktop with a notebook,
and the media player with a smartphone (and the trend indicates that
will continue), but the question still stands if there is practical room
for a notebook, smartphone and tablet. The only device that is a
definite at this point is the phone, and the notebook and tablet will
probably converge. Suppose some company beats the others to the punch on
that convergence? The secret lies in the cell phone and that is where
the next set of BoomBustBlog forensic analysis will focus.
This should be interesting, for to have a full blown Windows computer
running on a phone or tablet, with no compromises in terms of actual
productivity (read as being able to use the full Microsoft Office suite)
considerably changes the game in mobile computing. Don’t say I didn’t
tell you so, reference Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet and After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play.
What is even more exciting is the fact that this will cause Apple and
Google to REALLY kick it into overdrive, for as cool as their products
are, they don’t touch the depth, functionality and usability of the
suite of core Windows applications. The mere threat of Microsoft being
able to move that functionality to a true mobile platform is an
incentive for them to truly innovate.. In addition, look for the power
of a chip to truly adhere to Moore’s law again, if not better it, for
Intel must be feeling the pressure by now and they have yet to move
their low power contender (the Atom chip) onto the newer technology
fabrication processes. Since it is clear the company is not daft, this
probably means they have something strategic up their sleeves to combat
the loss of near exclusivity of the Wintel deal (with Microsoft courting
ARM architecture), probably the most powerful, profitable partnership
in the history of computing. One would assume that Intel will move into
low power consumption chips in a big way, for although the margins are
much lower than server chips, et. al., they cannot afford for the
Nvidias of the world to gain a foothold in what was the desktop domain.
From the Microsoft Press Release:
Redmond, Wash. – Jan. 27, 2011 –
Microsoft Corp. today announced record
second-quarter revenue of $19.95 billion for the quarter
ended Dec. 31, 2010. Operating income, net income and diluted
earnings per share for the quarter were $8.17
billion, $6.63 billion and $0.77 per share, respectively.
Prior year results reflect the
recognition of $1.71 billion of deferred revenue
relating to the Windows 7 Upgrade Option program and sales of Windows 7
before general availability in October 2009.
Second-quarter growth rates for revenue and earnings
per share were 5% and 4% respectively. Without the deferred recognition
in the prior year, second-quarter growth rates for
revenue and earnings per share were 15% and 28%,
respectively.
| (In millions, except per share amounts) | Three months ended December 31, | ||||||
| 2010 As Reported (GAAP) | 2009 As Reported (GAAP) | Deferred Revenue Recognition | 2009 As Adjusted (Non-GAAP) |
Percentage Change (GAAP) |
Percentage Change (Non-GAAP) |
||
| Revenue | $19,953 | $19,022 | $1,711 | $17,311 | 5% | 15% | |
| Operating Income | $8,165 | $8,513 | $1,711 | $6,802 | -4% | 20% | |
| Diluted Earnings Per Share | $ 0.77 | $ 0.74 | $0.14 | $ 0.60 | 4% | 28% | |
“We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect. The 8 million units of Kinect sensors sold in just 60 days
far exceeded our expectations,” said Peter Klein, chief financial
officer at Microsoft. “The pace of business spending, combined with
strong consumer demand, led to another quarter of
operating margin expansion and solid earnings per share growth.”
Among the factors driving Microsoft’s record revenues and earnings per
share was the 55% growth in revenue for the Entertainment &
Devices Division, as the success of the Kinect sensor boosted sales of
Xbox 360 consoles, Xbox Live subscriptions and Xbox games.
Microsoft Business Division revenue grew 24% year-over-year. Office
2010 is the fastest-selling consumer version of Office in history, with
license sales over 50% ahead of Office 2007 over an equivalent period
following launch.
The Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars!
- There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All
- The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift
- An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught
- Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet
- A First in the Mainstream Media: Apple’s Flagship Product Loses In a Comparison Review to HTC’s Google-Powered Phone
- After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play
- RIM Smart Phone Market Share, RIP?
- Android is gaining preference as the long-term choice of application developers
- A Glimpse of the BoomBustBlog Internal Discussion Concerning the Fate of Apple
- Math and the Pace of Smart Phone Innovation May Take a Byte Out of Apple’s (Short-lived?) Dominance
- Apple on the Margin
- RIM Smart Phone Market Share, RIP?
- Android Now Outselling iOS? Explaining the Game of Chess That Google Plays in the Smart Phone Space
- How
Google is Looking to Cut Apple’s Margin and How the Sell
Side of Wall Street Will Enable This Without Sheeple
Investor’s Having a Clue - Empirical Evidence of Android Eating Apple!
- More of the Android Onslaught: Increasing Handset Revenues and Growth
- Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion
- The BoomBustBlog Multivariate Research in Motion Valuation Model: Ready for Download
- The Complete, 63 pg Google Forensic Valuation is Available for Download
- iSuppli Continues to Validate BoomBustBlog’s Original Thesis: Android as the Viral Game Changer!
- BoomBustBlog Research Hits Another One Out the Park! Google up nearly 10% after hours, true blowout earnings unlike JPM
- As
I Warned in June, DO NOT DISCOUNT Microsoft in This Mobile Computing
War! Their Marketing Campaign is PURE GENIUS! and it Appears as if the
Phone Ain’t Bad Either - A Quick Peek Into the REAL WORLD Logic That Went Into Building the BoomBustBlog Apple Model: It’s Called Compression!!!
- advertisements -
If you're gonna talk your book, at least make your book less shitty.
You guys are being silly for no reason. MSFT is not my "book". I have no position in them, and I made it clear that deferred revenue is what boosted windows this quarter. The gist of the post is that that their consumer business is getting to be just as important as their enterprise business, and with that realization the company is really on to something with the Kinnect tech.
If (once) this becomes an interface for desktops and notebooks, you will see a singifcant change in the way people interface with their computers. That's my book, things are changing. Anybody who reads my posts know that I have absolutely no problem talking my book. It is interesting that only in the tech field do you have such love/hate relationships with inanimate companies. I love Apple. I hate Microsoft. Google is evil. yadayadayada
You're a great analyst Reggie. But you need to take people's natural polarization into the analysis. I hate microsoft. I've hated them since 1996 or so just from being sick of them being nothing but a giant pain in the butt.
There is a such love/hate with tech because it's a far far far more dangerous creation than the industrial revolution. You need to take it seriously.
So, who's got a bigger footprint in Egypt right now, Apple or Microsoft? </sarc>
Seriously man....we are witnessing the collapse of an empire, the demise of the monetary system, the twilight of a religion with the riots in the moslem street....and you bring us...video games??
Reggie must be sponsored by MSFT, or hope to be...he is constantly pumping them.
kinect numbers are not quite accurate. They are calling shipped units sold. Even shipped nums are exagerated. These are desperate times for these big tech o's alot of fake user nums from apple, msft, facebook, etc.
Stuffing the channel x infinity. Its the new american way!
Whats wrong w/ counting units shipped to dealers/retailers? Government Motors does it!
'Kinect' lol garbage...enjoying MSFT getting flash smashed today myself. Microsoft is garbage.
MSFT is actually a great company from a fundamentals perspective, but fundamentals don't really matter when you make up a pretty significant part of the NASDAQ index weighting.
you gotta love it when the sheeple line up around the block again to buy the latest and greatest overpriced new surveillance device.
http://gamrconnect.vgchartz.com/thread.php?id=118939
I have one of these things. From the moment I set it up, it felt very Orwellian - even just sitting there with the Xbox off. So much so, that I leave it unplugged. Only plug it in when the kids want to play it.
put a couple thick towels over it just in case.
oh wait the infrared sensor can probly see right through them.