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 US$4.9 billion for the quarter ended 31 March . The profits were driven by US$14.4 billion in sales, a 32 percent increase over the previous year. The quarter's sales included US$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 percent increase in sales of the company's client offerings to US$5.27 billion. Server product sales rose 15 percent to US$2.75 billion, and revenue from online services increased 11 percent to US$623 million. advertisement
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 US Department of Transportation, which have temporary bans on Vista.