Last Updated Jul 22, 2010 7:48 PM EDT
The 12-month increase in total revenue from 2009 to 2010 was $4.047 billion. The increase in revenue for the Windows & Windows Live division was $3.517 billion, or 86.9 percent of the total growth. Add the growth in Server and Tools, and you have an additional $675 million. In other words, all of Microsoft's growth was due to desktop and server editions of Windows 7 as well as affiliated tools. If it hadn't been for Windows 7, this would have been a pretty grim year for Microsoft. You can see the divisional breakdown below (click the chart for the full-sized version).
Some have also credited Office 2010 for a big share of the growth. There's just one problem with that view: It's factually wrong. Look again at the business division. In the fourth quarter, it was responsible for $683 million in growth. Now, that's a big chunk of money, but as part of nearly $3 billion in year-over-year increased revenue, it's a minor player.
There are some good reasons. Office 2010 was available for download by volume license customers at the end of April, but not for retail purchase, either in stores or online, until mid-June. That took out much of what the new product line could offer financially. However, there's also the question of how many people will find it a compelling-enough upgrade to shell out money for yet another version of Office. Given that Office 2007 is perfectly serviceable, I don't expect it to be as big as Microsoft and its investors might hope. We'll see more next quarter, but notice that the Business Division actually shrank by 1.4 percent. And everything else was fairly flat.
As Android revs up sales and people move much of their work from desktop to mobile devices using cloud computing, Microsoft is incredibly vulnerable, $62.5 billion revenue and 30 percent net income notwithstanding. Given the warm-but-hardly-overwhelming impressions of Windows Phone 7 and the company's late arrival in tablets, we're seeing a long, slow, but inevitable decline. Perhaps Microsoft becomes the business systems and back end computing company. But its days of dominating user lives are now numbered.