Deferred Revenue From Vista Upgrades Boosts Microsoft's Earnings

Concerns continue to be raised about application compatibility and hardware requirements



Despite signs that businesses are lukewarm to Microsoft's Windows Vista, the company reported record third-quarter profits last week, increased in part by deferred revenue from a Vista upgrade program.

Net income rose 65% year over year to $4.9 billion for the quarter ended March 31. The profits were driven by $14.4 billion in sales, a 32% increase over the previous year. The quarter's sales included $1.67 billion in deferred revenue from the redemption of upgrade coupons Microsoft handed out before Vista's launch.

The quarter saw Vista's consumer launch and the release of Office 2007. Vista helped drive a 67% increase in sales of the company's client offerings to $5.27 billion. Server product sales rose 15% to $2.75 billion, and revenue from online services increased 11% to $623 million.

Amid the strong numbers, some businesses and other organizations have concerns about application compatibility and Vista's hardware requirements (see story, p. 63). NASA is the latest federal agency to hold off upgrading its PCs to the operating system. It joins the Federal Aviation Administration and the U.S. Department of Transportation, which have temporary bans on Vista.

In a recent InformationWeek Research survey, nearly a third of 612 IT pros say their companies don't have plans to upgrade.

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