Kinect boosts Microsoft

Microsoft profit growth was sluggish in the fourth quarter of 2010 as strong sales of Kinect failed to offset poor uptake of its Windows 7 operating system.

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Net income for the three months to 31 December was at $6.63bn (£4.15bn), down from $6.66bn (£4.16bn) in the same period in 2009. Revenue increased slightly to £19.9bn (£12.48bn) up from $19bn (£11.88bn).

The Windows operating system runs on 90% of the world’s computers and is heavily dependent on global PC sales which grew just 3% in the quarter as consumers move to tablets and Apple hardware.

Sales in the Windows division fell 30% to $5.05m (£3.16m) as a consequence and partly due to the launch of Windows 7 in the same quarter in 2009.

However, its entertainment and devices division reported a 55% growth in revenue as sales of the Kinect sensor boosted sales of Xbox 360 consoles and games.

Chief financial officer Peter Klein says: “We are enthusiastic about the consumer response to our holiday line-up of products, including the launch of Kinect.

“The 8 million units of Kinect sensors sold in just 60 days far exceeded our expectations.”

Its business division, which sells software such as the latest version Microsoft Office, reported a 24% rise in sales to $6.03bn (£3.77m).

Its online services division which includes search engine Bing reported an operating income loss of $543m (£339.57). Last year Bing partnered with Yahoo! to form a search alliance in a bid to gain ground on Google and now all Yahoo! searches and advertising are powered by Microsoft.

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