Office 2010 sales power record Microsoft quarter

Division that sells Office accounted for 30 per cent of all revenues in 2010's final quarter

Sales of Office 2010 -- especially to consumers -- fueled Microsoft's record quarter, the company and analysts said last week.

"Office 2010 is the most successful consumer version we have ever shipped, and the product is also performing extremely well in the business segment," said Peter Klein, Microsoft's chief financial officer, during an earnings call Thursday with Wall Street analysts.

Microsoft's Business division, which includes the Office line, brought in $6.03 billion in revenues during the final quarter of 2010, an increase of 24 per cent over the same period the year before.

The division's revenues accounted for 30 per cent of Microsoft's total for the quarter, the largest piece of the pie of any of the company's groups. By comparison, Windows revenues contributed 25 per cent of Microsoft's revenues last quarter.

"Office 2010's success was a little bit of a surprise, honestly," said Rob Helm, an analyst with Directions on Microsoft, a Kirkland, Wash. research firm that focuses on Microsoft's moves.

In the fourth quarter of 2009, the Office division contributed 26 per cent of Microsoft's revenues, while the Windows division accounted for 38 per cent. At that time, the Office group sold Office 2007, by then a two-year-old product.

"Office 2010 sales are growing faster than PC sales," said Helm. "That's a mirror image of what was going on last year," he added, referring to very strong WIndows 7 sales late in 2009 that prompted a jump in computer sales.

Helm said that one contributing factor to Office's recent gains was business upgrades. "I think that there are a lot of small- and medium-sized businesses that have gotten behind on upgrade, and decided to go with Office 2010," he said.

Microsoft, however, mentioned strong sales to consumers several times during its earnings call.

"Office 2010 is the fastest-selling consumer version of Office in history, with license sales over 50 per cent ahead of Office 2007 for the equivalent period following launch," claimed Bill Koefoed, the general manager for investor relations.

In a filing with the U.S. Securities and Exchange Commission (SEC) last week, Microsoft said that while Office 2010 sales to businesses still accounted for the majority of the suite's revenues, consumer sales had increased by 49 per cent compared to the year before -- more then three times the 15 per cent growth rate of Office's business sales.

Price cuts may have played a part in boosting sales to consumers, said Helm, who cited the lower costs of some editions, particularly the consumer-oriented Home and Students version.

Before Microsoft launched Office 2010, it discarded the long-offered "upgrade" pricing -- discounts for users who already had an earlier version -- and replaced it with a single license price that in some cases was lower. A one-license copy of Office 2010 Home and Business 2010, for example, cost $199, $40 less than the corresponding Office 2007 Standard edition's upgrade price.

Retailers have also heavily discounted Office 2010 Home and Student, the most popular retail version. Amazon.com, for instance, currently sells that three-license edition for $125 -- $25 off list -- but other online sellers have it as low as $100.

"[Microsoft] is not taking its foot off the accelerator of core ... Office products," Allan Krans, an analyst with Technology Business Research, said in an e-mail. "The desktop market is Microsoft's to lose, and in [the fourth quarter of 2010] the company tightened its grip on these critical markets."

Overall, Microsoft brought in revenues of $19.85 billion, a record for the October-December quarter. The company cited a 55 per cent increase in sales from the company's Entertainment and Devices division -- on the back of the Kinect and its halo effect on the Xbox 360 game console -- as well as the strong Office numbers for driving revenues.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@computerworld.com .

Read more about applications in Computerworld's Applications Topic Center.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags IT industryMicrosoftsoftwareapplicationsDesktop Apps

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld (US)
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?