Microsoft reveals mixed results as Windows sales fade

But strong demand for consumer products helps to lift profits

Microsoft's stranglehold on the enterprise software market is beginning to weaken judging by its latest quarterly earnings, which suggest that mobile and tablet devices, largely from competitors Google and Apple, are beginning to undermine its Windows business.

Despite posting better-than-expected profits for its second financial quarter ending 31 December 2010, sales for Microsoft's Windows operating system fell 30 per cent on the year to $5.05bn (£3.18bn), missing its expectations by a cool $300m.

This was the result of the PC market growing just just three per cent over the quarter. Microsoft is hugely dependent on this area given that 90 per cent of PCs run on a Windows operating system.

However, Microsoft pointed out that it has now sold 300 million Windows 7 licences since the OS launched in October 2009, while rival Apple has sold just seven million iPad devices during the same period, suggesting any move towards mobile computing is still in its early stages.

Notably though, there are no specific figures given for Windows Phone sales; this is a product pitched directly against those of Apple, Google and RIM in the increasingly important smartphone market.

Microsoft has saved face in the consumer market though, seeing success with its new gaming offering, the Kinect. Overall, the company's revenues grew by five per cent to reach $19.9bn, and this figure was boosted by huge sales of the Xbox games console and the Kinect controller.