Microsoft deferred $1.1 billion in Windows Vista revenue, and another $500 million in Office related revenues during the fourth quarter of 2006, making it one of the weakest quarters in the company history. It was the lowest “4Q” growth in ten years, and the impact was felt in profitability, gross and operating marketing.
The spin according to the press release, “record revenue of $12.54 billion for the quarter ended December 31, 2006, a 6% increase over the same period of the prior year.” Not to be too negative – Microsoft had some seriously good news. Xbox 360 rocked the house, and exceeded even Microsoft’s expectations.
Still, Allan Krans, analyst with Technology Business Reserch believes that the deferred revenues show how critical Vista and the new Office are to Microsoft.
“Although the company invested billions into developing its next generation of billion dollar businesses, much of Microsoft’s success during the next two years will be tied to the updated versions of Vista and Office,” Krans writes in a note to his clients. Even though Vista is a major upgrade over the current versions of Windows OS, analysts are expecting a slow adoption rate for both Vista and Office amongst consumers and businesses alike.