| Device revenue, earnings up at Microsoft |
Apr. 25, 2008
 Microsoft's Entertainment and Devices Division (EDD), which includes the company's embedded Windows operating systems, has reported a year-over-year increase in quarterly revenue, and a profit margin approaching six percent. However, overall company revenue was flat, according to third quarter numbers released by Microsoft for fiscal 2008.
Microsoft said EDD revenue was $1.58 billion for its fiscal third quarter, up a whopping 68 percent over the same period last year, when revenue reached only $936 million. EDD revenues fell nearly 100 percent sequentially, however, due to fiscal Q2's alignment with the holiday spending season. EDD profits, meanwhile, rolled in at $89 million, for a margin just shy of six percent for the group.
Microsoft's EDD revenues were up sharply during the third quarter of 2008
Source: Microsoft
In its published results, Microsoft ascribed EDD's success to sales of Xbox 360 game consoles. Cumulative Xbox sales passed 19 million during the quarter, an increase of 74 percent from a year ago, according to the company. Unveiled about three years ago, and based on a triple-core PowerPC processor clocked at 3.2GHz running a second-order derivative of Windows 2000, the Xbox continues to sell well, apparently.
Microsoft's server and tools business was also a highlight, since its $3.26 billion in revenue was up 18 percent compared to the same quarter in 2007. The company cited "strong growth in consulting and support services," plus the launches of Windows Server 2008, SQL Server 2008, and Visual Studio 2008.
Microsoft's server and tools business continued in good health
Source: Microsoft
However, the company's client business, responsible for desktop editions of Windows, lagged badly, since its $4.03 billion in revenue was down 24 percent year-over-year. Microsoft did its best to put a positive spin on this, saying that revenue was really down only two percent, when the value of the free Vista upgrades it gave to PC buyers in late 2006 and early 2007 is taken into account. Meanwhile, more than 140 million Windows Vista licenses have been sold, the company added.
Overall, Microsoft's revenue was approximately the same as in the third quarter of last year -- $14.45 billion in 2008, as opposed to $14.4 billion in 2007. Diluted earnings per share were $0.47, down slightly from the $0.50 reported for the same quarter in 2007.
Microsoft created EDD in September, 2006, when it merged its Mobile and Embedded Devices (MED) and Home and Entertainment divisions. Since then, it has been very difficult to determine how much Microsoft's embedded operating systems contribute to the company's bottom line: EDD is responsible not only for Windows XP Embedded, Windows CE, and Windows Mobile, but also for products such as the Xbox 360 gaming console and Zune music player.
More information can be found on Microsoft's investor relations website, here.
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