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MS licensing deadline boosts popularity of WinXP

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Microsoft's sales grew 10 per cent in its fourth quarter, helped by what is described as strong demand by business for Windows XP. This strong demand might under other circumstances be viewed as curious, considering businesses have battened down the hatches are are taking an extremely leery view of IT investment, but currently we have the small matter of the Licensing 6 31st July switch or die deadline. We'd have said 'strong surrender' was more appropriate.

Microsoft also has this month to run before 6 kicks in, so should benefit in Q1 from the last minute brigade. Desktop software sales (i.e. the Windows bit) were up 9 per cent to $5 billion, and you should note these will be licence sales, not necessarily installations. Microsoft's 'downgrade' programme allows - nay, encourages - businesses who're not ready to upgrade to license the new software in order to obtain the right to run new installations of the old software.

Away from the PC tax the picture was a little less positive for Microsoft. Desktop applications sales were flat, indicating that businesses feel able to resist gouging in that department (and why not? Office 97 still works), while enterprise applications managed a four per cent rise. These are both important to Microsoft, because despite appearances to the contrary there is a limit to what businesses are prepared to pay for Windows (no, we don't know what it is either). It would therefore dearly love to make Office a 'must have' in the same way as Windows is, and it needs strong growth in enterprise software.

Server software sales were up 13 per cent, but this could easily be accounted for by pricing and spec manoeuvring, rather than an outbreak of undying love for Windows 2000 Advanced Server.

Also in the flattish department we have Xbox sales, around the revised target of 3.9 million, but way below the original plan of 6 million. The overall picture remains of a company squeezing revenue from its existing franchises and not demonstrably succeeding in developing new ones. Yet.

Total revenue was $7.25 billion, up 9.9 per cent, so we should all be so unlucky, and net profit $1.53 billion. Microsoft took a charge of $806 million in the period to cover its catastrophic foray into the cable business. Which was an attempted breakout which has now demonstrably failed. ®

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