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Tag: Xbox

  • Xbox 360 Dashboard Update Makes Questionable Changes

    If you’re connected to Xbox Live, then today you’ll enjoy an update to the Xbox 360 dashboard. Generally, Microsoft will make some cosmetic changes and perhaps add new features or menus to try and make the interface more accessible and interesting. With their latest update, they’ve instead decided to make things a tad more difficult for people and mess with their judicial rights.

    Oh that Microsoft.

    First things first, one small but head scratching change looks to be a switch in controls for looking up game details and ejecting a disc. What was once “X” to eject and “Y” to look at details is now switched in the latest update. One upset 360 user couldn’t have summed it up any better.

    Xbox 360 dashboard update

    While the change above is something noticeable and will affect a large amount of people, the second change is something which will go unnoticed by many but is actually pretty scary. In order to download the update, you must accept a new Terms of Service (ToS) agreement. Usually, ToS’s are ignored by everyone because who wants to read through a bunch of law jargon, when they just want to play Gears of War?

    However, in the latest ToS, Microsoft added this nifty little clause which is very eye-opening. If you don’t want to read all of it, I’ll summarize afterwards:

    IF YOU LIVE IN THE UNITED STATES, YOU AND MICROSOFT AGREE THAT IF YOU AND MICROSOFT DO NOT RESOLVE ANY DISPUTE BY INFORMAL NEGOTIATION UNDER SECTION 18.1.2 ABOVE, ANY EFFORT TO RESOLVE THE DISPUTE WILL BE CONDUCTED EXCLUSIVELY BY BINDING ARBITRATION IN ACCORDANCE WITH THE ARBITRATION PROCEDURES IN SECTION 18.1.7 BELOW. YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, YOU ARE GIVING UP THE RIGHT TO LITIGATE (OR PARTICIPATE IN AS A PARTY OR CLASS MEMBER) ALL DISPUTES IN COURT BEFORE A JUDGE OR JURY. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR’S AWARD.

    THE ONLY DISPUTES NOT COVERED BY THE AGREEMENT IN SECTION 18.1 TO NEGOTIATE INFORMALLY AND ARBITRATE ARE DISPUTES ENFORCING, PROTECTING, OR CONCERNING THE VALIDITY OF ANY OF YOUR OR MICROSOFT’S (OR ANY OF YOUR OR MICROSOFT’S LICENSORS’) INTELLECTUAL PROPERTY RIGHTS.

    and…

    18.1.6. CLASS ACTION WAIVER. YOU AND MICROSOFT AGREE THAT ANY PROCEED­INGS TO RESOLVE OR LITIGATE ANY DISPUTE, WHETHER IN ARBITRATION, IN COURT, OR OTHERWISE, WILL BE CONDUCTED SOLELY ON AN INDIVIDUAL BASIS, AND THAT NEITHER YOU NOR MICROSOFT WILL SEEK TO HAVE ANY DISPUTE HEARD AS A CLASS ACTION, A REPRESENTATIVE ACTION, A COLLECTIVE ACTION, A PRIVATE ATTORNEY-GENERAL ACTION, OR IN ANY PROCEEDING IN WHICH YOU OR MICROSOFT ACTS OR PROPOSES TO ACT IN A REPRESENTATIVE CAPACITY. YOU AND MICROSOFT FURTHER AGREE THAT NO ARBITRATION OR PROCEEDING WILL BE JOINED, CONSOLIDATED, OR COMBINED WITH ANOTHER ARBITRATION OR PROCEEDING WITHOUT THE PRIOR WRITTEN CONSENT OF YOU, MICROSOFT, AND ALL PARTIES TO ANY SUCH ARBITRATION OR PROECCEDING.

    Basically, both of those clauses protect Microsoft from being sued should you desire to take them to court over Xbox Live or your Xbox 360 console. Instead of going to court, any dispute will be handled by private arbitration. These arbitrations keep these disputes out of the public eye, which really only benefits Microsoft.

    There are many states which provide citizens’ rights to always be allowed legal action, so you might want to check your state before accepting Microsoft’s ToS.

    This is certainly not what you wanted to hear before starting your Xbox 360 dashboard download. Just don’t shoot the messenger.

  • Xbox Update Delayed

    Update: Hryb tweeted:

    We are a go! The #XboxUpdate is currently on its way to all 35 million Xbox LIVE members around the world (1/2) 11 hours ago via TweetDeck · powered by @socialditto

    This week, Microsoft announced the launch of its new Xbox platform and apps, with the goal of bringing about “the evolution of TV and entertainment”. Here’s a list of the apps and their scheduled release dates.

    The company has apparently run into some unexpected issues with the launch, however. There isn’t much in the way of details, but there has been at least a slight delay.

    Larry Hryb (aka: MajorNelson) of the Xbox team has been tweeting throughout the day:

    FYI: The timing for Xbox 360 dashboard update has been slightly delayed. I’ll have a status update later today 4 hours ago via TweetDeck · powered by @socialditto

    Thanks again for your patience. I won’t have additional details until later today. The moment I have new information, I’ll share it w/ you 4 hours ago via TweetDeck · powered by @socialditto

    Read my previous tweets regarding the status of the Xbox 360 dashboard update 3 hours ago via TweetDeck · powered by @socialditto

    I’ll share additional details when I have more to share. Until then, thanks for you patience. 3 hours ago via TweetDeck · powered by @socialditto

    We are still working to get the release out. Stay tuned, we’ll have an update this afternoon (PT) on when it will begin rolling out. 1 hour ago via TweetDeck · powered by @socialditto

    No new information to report yet. My earlier update is still the most current http://t.co/qq8AUPAs 5 minutes ago via TweetDeck · powered by @socialditto

    Bing and Kinect play a big role in the update. You can read a bit more about that here. And here’s some info about ads that are on the way.

    The Xbox 360 console experienced record Black Friday sales this year.

  • Get Ready For A Bunch Of Ads On Xbox

    Get Ready For A Bunch Of Ads On Xbox

    As you may know, Microsoft is launching a big Xbox update, and rolling out a whole bunch of entertainment apps. Along with all of that, of course, comes plenty of advertising.

    Microsoft’s Shawn McMichael talks about this on the company’s advertising blog. He says the launch “represents a new era of interactive TV advertising and a couple of firsts for advertising on Xbox Live.”

    These would be standard TV ad spots within traditional TV content on Xbox Live, and Kinect-enabled branded destination experiences on Xbox Live.

    “This makes Xbox LIVE the largest next generation TV platform to offer advertisers the ability to purchase 30 second TV spots within entertainment content. It also makes Xbox the only place on TV where advertisers can use the power of gesture to engage with audiences!” he says.

    “From the moment Kinect launched, a little over a year ago, the industry has been asking us, what does this mean for advertisers?” he continues. “There has been a lot of talk about how Kinect voice and gesture controls have the power to transform TV and, in truth, the creative possibilities are endless. But we needed to develop formats to help advertisers take advantage of those possibilities and today I’m pleased to announce that we’ve delivered on that promise. At launch, we now more than 100 unique campaigns running with Kinect-enhanced BDEs, reaching the highly engaged audience of 35 million active Xbox LIVE subscribers around the globe.”

    Content providers (like The Today Show, for example) are also partnering with Microsoft to sell standard 30-second ad spots within their content on Xbox Live.

    The launch of all of the new apps will certainly make the Xbox a much more accessible to a wider audience, and that definitely means more ad appeal.

  • Bing Voice Search Comes to Xbox This Week

    Microsoft announced that beginning December 6, and in the months ahead, it will be rolling out Bing Voice Search on Xbox. This will enable users to find content across Netflix, Hulu Plus, Comcast Xfinity on Demand ,HBO Go, Zune, and other programs on Xbox Live.

    Actually, this is just one of many new features coming to Xbox. The company made a huge “future of TV” announcement for the Xbox 360. This includes a group of new apps aimed at boosting the entertainment potential of the console. It includes a lot of television and video related content. More on that here.

    “Bing on Xbox opens up living room entertainment the same way search engines opened up the web,” says Bing GM Mike Nichols. “When you think about the state of entertainment, there isn’t a lack of selection, the challenge is finding what you want in a timely manner. Now when you say “Xbox, Bing, Star Trek,” Bing will show you all the available options for the movies, music, games, on-demand TV and apps that match that title.”

    “Our goal with features like Bing on Xbox is to make Bing available in convenient and intuitive ways that take advantage of the capabilities of your device,” adds Nichols. “You can see this today with features like: voice search on Bing for Mobile, implicit search such as Local Scout on Windows Phone, the ability to search using your phone’s camera with Bing Vision, and touch/contextual search through the Lasso feature on the Bing for iPad. With Bing on Xbox, we are introducing a more natural way to search on the TV. And as a result, you can spend more time enjoying your entertainment, and far less time hunting for it.”

    I was just saying the other day how it was surprising that Microsoft doesn’t utilize its Xbox platform more to Bing’s advantage. Frankly, they could still go further if you ask me.

    Reports have Google’s deal with Mozilla dead, with a huge window of opportunity for Bing to slip in and boost its search market share there. It remains to be seen if that will happen, but with a Mozilla deal and more of a web focus on Xbox, Bing could potentially make some pretty substantial inroads in its competition with Google.

    Bing for Xbox voice search will be available in English in the U.S., Canda and the U.K. for Zune video, Xbox Live Marketplace and select content partners at first. For those who don’t have Kinect, text search will be available in Xbox Live markets.

  • Xbox 360 App Release Dates

    It’s no surprise, but Microsoft is working hard to make Xbox the go-to device for living room entertainment. The company has a pretty good head start in this department (no question), when compared to a rival like Google or Apple.

    The Xbox 360 is enormously popular, already, and consistently performs very well for the company, come earnings report day. Now, they’re set to launch a slew of TV/video entertainment-related apps that should go a long way in solidifying Xbox as the premier way to connect to online video content for many users.

    And they’re doing it with Kinect and voice search as a nice bonus.

    “A new era in entertainment begins where all your entertainment is together in one place — your games, movies, TV shows, music and sports,” said Don Mattrick, president of the Interactive Entertainment Business at Microsoft. “With this update, Xbox 360 system owners will experience Kinect voice control integrated with Bing search, making your TV and entertainment experiences more social and personal than ever.”

    The company put out this infographic with its announcement:

    xbox entertainment

    Here’s the schedule of the apps that will be rolling out:

    Dec. 6:

    EPIX. United States
    ESPN on Xbox LIVE (ESPN). United States
    Hulu. Japan
    Hulu Plus. United States
    LOVEFiLM. United Kingdom
    Netflix. Canada, United States
    Premium Play by (MediaSet). Italy
    Sky Go (SkyDE). Germany
    Telefónica España – Movistar Imagenio. Spain
    TODAY (MSNBC). United States

     

    Later in December:

    4 on Demand (C4). United Kingdom
    ABC iView (Australian Broadcasting Corp.). Australia
    AlloCiné. France (AlloCiné), Germany (Filmstarts), Spain (Sensacine), United Kingdom (Screenrush)
    Astral Media’s Disney XD (Astral Media). Canada
    blinkbox (Blinkbox). United Kingdom
    Crackle (Sony Pictures). Australia, Canada, United Kingdom, United States
    Dailymotion. Available in 32 countries globally
    Demand 5 (Five). United Kingdom
    DIGI+ (CANAL+). Spain
    GolTV (Mediapro). Spain
    iHeartRadio (Clear Channel). United States
    Mediathek/ZDF (ZDF). Germany
    MSN. Canada, France, Germany, Italy, Mexico, United Kingdom
    MSNBC.com. United States
    MUZU.TV. Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, United Kingdom
    ninemsn. Australia
    Real Sports (Maple Leaf Sports). Canada
    Rogers On Demand Online (Rogers Media). Canada
    SBS ON DEMAND.Australia
    Sky Go (SkyDE). Austria
    TMZ (Warner Bros.). Canada, United States
    TVE (RTVE.es). Spain
    UFC on Xbox LIVE (UFC). Canada, United States
    Verizon FiOS TV. United States
    VEVO. Canada, Ireland, United Kingdom, United States
    Vudu (Wal-Mart). United States
    YouTube. Available in 24 countries globally

     

    Early 2012:

    Antena 3 (Antena 3 de Televisión). Spain
    BBC (BBC). United Kingdom
    CinemaNow (Best Buy). United States
    HBO GO (HBO). United States
    MLB.TV (MLB Advanced Media). Australia, Brazil, Canada, Chile, Columbia, Czech Republic, France, Germany, India, Ireland, Italy, Japan, Korea, Mexico, Netherlands, New Zealand, Poland, Russia, South Africa, Spain, Sweden, Taiwan, United Kingdom, United States
    Telenovelas/Sports (Televisa). Brazil, Chile, Colombia, France, Italy, Mexico, Spain, United Kingdom
    Xfinity On Demand (Comcast). United States

    With Xbox obviously being much more than a gaming console now, this can’t hurt holiday sales either.

  • Xbox 360 Posts Record Black Friday Sales

    Xbox 360 Posts Record Black Friday Sales

    This year’s Black Friday pleasantly surprised retailers when sales grew far more than expected. The biggest areas of growth were electronics and video games. One of the biggest winners this year appears to have been Microsoft. No doubt propelled by the release of several highly anticipated games, including The Elder Scrolls: Skyrim, and a number of new Kinect titles, the company reports that it sold nearly 1 million units of the Xbox 360 console and nearly 800,000 of the Kinect sensor in the week leading up to Black Friday. While some of the Kinect units were bundled with the Xbox consoles many were not, and the sales figures are nevertheless impressive.

    The current generation of the so-called “console wars” between the Xbox, Nintendo’s Wii, and Sony’s Playstation 3 has been dominated by Microsoft almost from the beginning. The Xbox 360 was the first of the consoles to be released – hitting stores nearly a year ahead of the competition. While the Wii’s innovative design helped it gain popularity among casual gamers, it has never managed to dislodge Microsoft from its dominant position in the U.S. (the Wii maintains highest market share globally, however). Meanwhile Playstation, which boasted the most powerful technical specs of the three, also carried a price tag that many found exorbitant, especially in light of the Xbox and Wii’s much lower cost.

    The Kinect sensor tracks the movement of players as they play, allowing them to game without a controller. It is compatible both with the original Xbox 360 and the redesigned Xbox 360 Slim, which released last summer. It continues a trend begun with the Nintendo Wii of using player movement to control gameplay. Shortly after the release of Kinect, Sony unveiled the Playstation Move controller, which mimics the function of the Wii remote in many respects.

    The Kinect sensor helps drive new Xbox sales.

    While neither Sony nor Nintendo have posted their Black Friday week console sales figures, USA Today reports that Nintendo sold over 500,000 units of their Nintendo 3DS portable gaming system, as well as 535,000 of the long awaited Legend of Zelda: Skyward Sword, the latest installment in their flagship Legend of Zelda game series.

    All in all, the game console market remains dominated by Microsoft, which boasts a 44% share of the market. October was the eighth consecutive month in which the Xbox had a market share above 40%. The console has had the top spot in the market for a total of eleven consecutive months. With more game releases and a re-design of the console’s Xbox Live dashboard still to come, there is every reason to believe that trend will continue.

  • Call of Duty Female Gamer Records Her Experiences With Sexism

    Everyone knows that when conversing with people online, the veil of anonymity can make people say all sorts of things they wouldn’t utter in real life. Blogs, news sites, and other online mediums have been dealing with this problem for years within the comment sections and forums on a website. This extends to the realm of video games, when playing them online through Xbox Live, Playstation Network, or on the PC. If you’re a woman, many times you’re met with a whole separate experience which can include some extremely sexist behavior.

    Jenny Haniver, has started a website titled: Not in the Kitchen Anymore. The premise is simple, she records and documents her experiences playing first person shooters, specifically Call of Duty, and posts these experiences on the website. What you find on her website is pretty shocking, with a lot of it being so extreme it borders on the hilarious.

    Notinthekitchen.com

    I found this site a few days ago, and was completely taken by it. Once you start listening to some of these recordings, you can’t stop. You’ll laugh, be amazed, and scared there are people like this who walk among us.

    I actually got to speak with Haniver about her website, to gain a bit more insight concerning the project.

    My Recorded Discussion With Jenny Haniver (NSFW: Language)

    After talking with Jenny, it’s obvious she’s not looking for pity or to say that everyone acts in the same way as the people in her recordings. She simply wants to shed light on the problem, and show just how bad it can get for ladies on Xbox Live or any other online gaming platform.

    Here’s what Jenny had to say about the site, “And that’s essentially the focus of my blog- the dated, hostile, and sometimes downright weird reactions men, and occasionally even other women, have to interacting with females in an anonymous setting that is considered to be male dominated (online video games, specifically first person shooters). Obviously sexism isn’t the only problem prevalent in online gaming, it’s just the one I’ve chosen to focus on.

    This behavior is something that most female gamers will have to face at some point if they choose to game online. The aim of my project is education; some people genuinely have no idea this is going on. By exposing this type of behavior, I’m hoping to raise awareness- and possibly push people to remember that it’s a real live person on the other side of that microphone.

    To give you an idea of how a recording will go, here’s a transcript from one of the more tame samples:

    RMP = random male player

    RMP1: Huh?

    RMP2: Can’t end it like that.

    RMP1: And we got beat by a girl.

    [laughter]

    RMP3: Wisconsin, what’s up!

    Me: You say that like that’s a bad thing.

    RMP2: Nah it’s cool. As long- as long as you’re skinny.

    [laughter]

    RMP1: Her avatar is pretty hot.

    RMP2: So are you skinny?

    RMP3: Who is?

    The website spun out of an art project she did for a college course, highlighting many of the quotes she recorded for the project.

    Not in the Kitchen Anymore Project

    She also set up an audio booth, represented by a blue controller and a pink controller. They doubled as MP3 players, with the blue controller playing sound bites from a male vantage point, with the pink playing what women hear while playing.

    Not in the Kitchen Anymore Project

    The website is a humorous, albeit sad look at what many people resort to when provided an anonymous shield. The only way you can combat this kind of nonsense is to call it out, and let other people know what’s happening. Haniver is just doing that in a creative, and funny way.

  • Netflix, Qwikster, Xbox Live on Windows 8 and Hot Wheels

    Netflix, Qwikster, Xbox Live on Windows 8 and Hot Wheels

    Today’s edition of the daily top videos article has mostly tech-related stuff, but it also has Netflix apologizing for the way it’s handled its recent pricing and plan restructuring. Of course the apology was accompanied by yet another controversial move.

    There is also plenty of media industry drama, for those of you who have been following the AOL/TechCrunch plot. Let’s get to the videos.

    Xbox Live running on Windows 8:

    Pretty cool video of what it would “feel like to fly over planet Earth” has been making its way around the tech blogs and social networks:

    A Hot Wheels publicity stunt that performed well on YouTube:

    And an explanation of the campaign from BlogWell (via Business Insider):

    Mattel: Hot Wheels’ Record Breaking Stunt, presented by Betsy Burkett and Gretchen de Castellane from GasPedal and SocialMedia.org on Vimeo.

    One of the most talked about things on the web today is Netflix’s decision to split its DVD and streaming businesses into two. Here’s a video of CEO Reed Hastings talking about the decision and apologizing for how things have been going lately:

    Google Wallet has also been a hot topic of conversation between the George Costanza teaser and a leaked document indicating it would be launching today. Here’s the video Google put out when it announced Google Wallet, in case you need a reminder of what it’s all about:

    Here’s what Redmond Pie calls “the Best iPad Knock-Off We’ve Ever Seen”. It runs Android 2.3.3 Gingerbread.

    Kara Swisher points to a pair of CNN interviews in which now former TechCrunch writer Paul Carr and herself talk about the drama that has recently unfolded at AOL and TechCrunch:

    Interesting video from HakTip at Revision3 on how to make any application portable:

    Gizmodo points to this video of a boat motor-powered blender:

  • Bing is the Future of Your Living Room (According to Microsoft)

    In June, Microsoft announced it would be bringing Bing search to the Xbox this year, though the announcement was exactly for the full Bing search engine.

    Frank Shaw, Corporate Vice President of Corporate Communications at Microsoft talked a bit more about it today in a blog post, sharing a video with BIng for Xbox in action. I’m having trouble getting the embed to work (you can see the video here), but basically, it shows people saying, “Xbox, Bing this,” and “Xbox, Bing that.” and Xbox surfacing games, movies, etc. through voice search.

    It searches through games, music, video, and apps on the Xbox to retrieve available results. This is not searching the web, as you would traditionally do with BIng.

    Here’s another video demo from E3:

    “Our philosophy is pretty simple: All the entertainment you want, with the people you care about, made easy… This video brings that philosophy to life, while showing off what the combination of Xbox, Kinect, Bing and voice recognition can do for your entertainment experience,” says Shaw.

    “As you can see, integration of products and services like Xbox, Kinect and Bing is at the heart of our strategy. This is just one more example of how Bing is more than just Microsoft’s search engine, competing to win against Google – Bing is also a strategic asset that makes many other Microsoft products better and more attractive to our customers. Thanks to Bing, Kinect and our voice recognition technology, we envision a future where the words ‘Hey, where’s the remote?’ are as outdated as eight-track tapes and rotary telephones.”

    That’s all fine and good for Xbox users, of which there are many, but if you ask me, in terms of that competing with Google thing, Microsoft is still missing a huge opportunity here to get more search market share, by not simply providing access to the Bing web search engine via Xbox.

    Microsoft already has a huge advantage over Google in the living room, thanks to the popularity of the Xbox (a major factor in Microsoft’s revenue). Google TV hasn’t worked as well as Google hoped. At least so far. The Motorola Mobility acquisition could help with that though. They make set-top boxes (among other things).

    Perhaps Microsoft should put a little more emphasis on full web search from the TV sooner rather than later.

  • Microsoft Posts Record Revenue Thanks to Xbox

    Microsoft reported record fourth-quarter revenue for its Fiscal Year Q4 at $17.37 billion for the quarter, up 8% from the same quarter last year.

    “Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion,” said Microsoft CFO Peter Klein. “Our platform and cloud investments position us for long-term growth.”

    “A strong year of double-digit increases in revenue and earnings is a real credit to all of our Microsoft employees and partners around the world. We continue to see strong business demand across all of our products, from small businesses all the way up to the largest global enterprises,” said COO Kevin Turner. “Our move to cloud services continues with the release and momentum of Office 365 and growth in Windows Azure. We’re providing our customers seamless and powerful ways to move to the cloud, and we are well positioned for the coming year.”

    Microsoft’s business division revenue grew 7% for the quarter and 16% for the full year, but the Entertainment & Devices Division (Xbox, Kinect) grew 30% for the quarter and 45% for the year, showing once again where the real money lies for Microsoft.

    The Online Services Division, which includes Bing, was up 17% for the fourth quarter and 15% for the year.

    Here’s the release in its entirety:

    REDMOND, Wash. — Jul. 21, 2011 — Microsoft Corp. today announced record fourth-quarter revenue of $17.37 billion for the quarter ended June 30, 2011, an 8% increase from the same period of the prior year. Operating income, net income, and diluted earnings per share for the quarter were $6.17 billion, $5.87 billion, and $0.69 per share, which represented increases of 4%, 30%, and 35%, respectively, when compared with the prior year period.

    For the fiscal year ended June 30, 2011, Microsoft reported record revenue of $69.94 billion, a 12% increase from the prior year. Operating income, net income, and diluted earnings per share for the year were $27.16 billion, $23.15 billion, and $2.69, which represented increases of 13%, 23%, and 28%, respectively, when compared with the prior year.

    “Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion,” said Peter Klein, chief financial officer at Microsoft. “Our platform and cloud investments position us for long-term growth.”

    Microsoft Business Division revenue for the fourth quarter grew 7% and 16% for the full year. Office 2010 continues to be the fastest-selling version of Microsoft Office in history with over 100 million licenses sold. In June, Microsoft released Office 365 with familiar Microsoft Office collaboration and productivity tools delivered through the cloud.

    Server & Tools revenue grew 12% for the fourth quarter, the fifth consecutive quarter of double-digit growth, and grew 11% for the full year. Windows Server, System Center, and SQL Server continued to drive revenue growth in the segment.

    Windows and Windows Live Division revenue declined 1% for the fourth quarter and revenue for the full year decreased 2%. Excluding the impact of the prior year Windows 7 launch and revenue deferral, we estimate full-year revenue growth was in line with PC market growth of 2% to 4%. Windows 7 has sold over 400 million licenses and business deployments continue to accelerate. During the quarter, Microsoft unveiled a preview of the next version of Windows, codenamed Windows 8, featuring a new user interface and application experience.

    Online Services Division revenue grew 17% for the fourth quarter and 15% for the full year, primarily driven by increases in search revenue. Bing’s U.S. search share increased 340 basis points year-over-year to 14.4% this quarter. Microsoft also released new features that incorporate the Facebook social graph to help users make better decisions based on their social connections.

    Entertainment & Devices Division revenue grew 30% for the fourth quarter and 45% for the full year, due to the ongoing momentum of the console, Kinect, and Xbox Live. Xbox 360 has been the top-selling game console in the U.S. over the past twelve months. At E3 in June, Microsoft highlighted its upcoming game lineup, Xbox Live content partnerships, and enhanced content discovery using Bing and Kinect.

    “A strong year of double-digit increases in revenue and earnings is a real credit to all of our Microsoft employees and partners around the world. We continue to see strong business demand across all of our products, from small businesses all the way up to the largest global enterprises,” said Kevin Turner, chief operating officer at Microsoft. “Our move to cloud services continues with the release and momentum of Office 365 and growth in Windows Azure. We’re providing our customers seamless and powerful ways to move to the cloud, and we are well positioned for the coming year.”

    Business Outlook

    Microsoft reaffirms fiscal 2012 operating expense guidance of 3% to 5% growth from 2011, or $28.0 billion to $28.6 billion.

    Webcast Details

    Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed athttp://www.microsoft.com/investor. The webcast will be available for replay through the close of business on Jul. 21, 2012.

    About Microsoft

    Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

    Forward-Looking Statements

    Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

    • execution and competitive risks in transitioning to cloud-based computing;
    • challenges to Microsoft’s business model;
    • intense competition in all of Microsoft’s markets;
    • Microsoft’s continued ability to protect its intellectual property rights;
    • claims that Microsoft has infringed the intellectual property rights of others;
    • the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;
    • actual or perceived security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;
    • improper disclosure of personal data that could result in liability and harm to Microsoft’s reputation;
    • outages and disruptions of services provided to customers directly or through third parties if Microsoft fails to maintain an adequate operations infrastructure;
    • government litigation and regulation affecting how Microsoft designs and markets its products;
    • Microsoft’s ability to attract and retain talented employees;
    • delays in product development and related product release schedules;
    • significant business investments that may not gain customer acceptance and produce offsetting increases in revenue;
    • unfavorable changes in general economic conditions, disruption of our partner networks or sales channels, or the availability of credit that affect demand for Microsoft’s products and services or the value of our investment portfolio;
    • adverse results in legal disputes;
    • unanticipated tax liabilities;
    • quality or supply problems in Microsoft’s consumer hardware or other vertically integrated hardware and software products;
    • impairment of goodwill or amortizable intangible assets causing a charge to earnings;
    • exposure to increased economic and regulatory uncertainties from operating a global business;
    • geopolitical conditions, natural disaster, cyberattack or other catastrophic events disrupting Microsoft’s business; and
    • acquisitions, joint ventures and strategic alliances that adversely affect the business.

     

    For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/investor.

    All information in this release is as of July 21, 2011. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

    For more information, press only:

    Rapid Response Team, Waggener Edstrom Worldwide, (503) 443-7070,rrt@waggeneredstrom.com

    For more information, financial analysts and investors only:

    Bill Koefoed, general manager, Investor Relations, (425) 706-3703

     

    Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/investor.

    MICROSOFT CORPORATION
    INCOME STATEMENTS
    (In millions, except per share amounts) (Unaudited)
    Three Months Ended June 30, Twelve Months Ended June 30,
    2011 2010 2011 2010
    Revenue $  17,367 $16,039 $  69,943 $62,484
    Operating expenses:
    Cost of revenue 3,708 3,170 15,577 12,395
    Research and development 2,393 2,350 9,043 8,714
    Sales and marketing 3,916 3,602 13,940 13,214
    General and administrative 1,179 987 4,222 4,063
    Total operating expenses 11,196 10,109 42,782 38,386
    Operating income 6,171 5,930 27,161 24,098
    Other income 148 94 910 915
    Income before income taxes 6,319 6,024 28,071 25,013
    Provision for income taxes 445 1,506 4,921 6,253
    Net income $    5,874 $  4,518 $  23,150 $18,760
    Earnings per share:
    Basic $      0.70 $    0.52 $      2.73 $    2.13
    Diluted $      0.69 $    0.51 $      2.69 $    2.10
    Weighted average shares outstanding:
    Basic 8,429 8,712 8,490 8,813
    Diluted 8,521 8,821 8,593 8,927
    Cash dividends declared per common
    share
    $      0.16 $    0.13   $      0.64 $    0.52

     

    MICROSOFT CORPORATION
    BALANCE SHEETS
    (In millions) (Unaudited)
    June 30,
    2011
    June 30,
    2010
    Assets
    Current assets:
    Cash and cash equivalents $        9,610 $     5,505
    Short-term investments (including securities loaned
    of $1,181 and $62)
    43,162 31,283
    Total cash, cash equivalents, and short-term
    investments
    52,772 36,788
    Accounts receivable, net of allowance for doubtful
    accounts of $333 and $375
    14,987 13,014
    Inventories 1,372 740
    Deferred income taxes 2,467 2,184
    Other 3,320 2,950
    Total current assets 74,918 55,676
    Property and equipment, net of accumulated depreciation
    of $9,829 and $8,629
    8,162 7,630
    Equity and other investments 10,865 7,754
    Goodwill 12,581 12,394
    Intangible assets, net 744 1,158
    Other long-term assets 1,434 1,501
    Total assets $    108,704 $    86,113
    Liabilities and stockholders’ equity
    Current liabilities:
    Accounts payable $        4,197 $     4,025
    Short-term debt 0 1,000
    Accrued compensation 3,575 3,283
    Income taxes 580 1,074
    Short-term unearned revenue 15,722 13,652
    Securities lending payable 1,208 182
    Other 3,492 2,931
    Total current liabilities 28,774 26,147
    Long-term debt 11,921 4,939
    Long-term unearned revenue 1,398 1,178
    Deferred income taxes 1,456 229
    Other long-term liabilities 8,072 7,445
    Total liabilities 51,621 39,938
    Commitments and contingencies
    Stockholders’ equity:
    Common stock and paid-in capital – shares authorized
    24,000; outstanding 8,376 and 8,668
    63,415 62,856
    Retained deficit, including accumulated other
    comprehensive income of $1,863 and $1,055
    (6,332) (16,681)
    Total stockholders’ equity 57,083 46,175
    Total liabilities and stockholders’ equity $    108,704 $    86,113
           

     

    MICROSOFT CORPORATION              
                 
    CASH FLOW STATEMENTS
    (In millions) (Unaudited)
                   
      Three Months Ended June 30,   Twelve Months Ended June 30,
    2011 2010 2011 2010
    Operations              
    Net income $    5,874 $  4,518   $  23,150 $18,760
    Adjustments to reconcile net income
    to net cash from operations:
         
    Depreciation, amortization, and
    other
    689 718   2,766 2,673
    Stock-based compensation
    expense
    544 482   2,166 1,891
    Net recognized losses (gains) on
    investments and derivatives
    15 114   (362) (208)
    Excess tax benefits from
    stock-based compensation
    (3) (7)   (17) (45)
    Deferred income taxes 326 (483)   2 (220)
    Deferral of unearned revenue 11,896 9,682   31,227 29,374
    Recognition of unearned revenue (7,746) (7,055)   (28,935) (28,813)
    Changes in operating assets and
    liabilities:
         
    Accounts receivable (4,886) (4,144)   (1,451) (2,238)
    Inventories (303) (260)   (561) (44)
    Other current assets (772) 374   (1,259) 464
    Other long-term assets (110) (80)   62 (223)
    Accounts payable 293 755   58 844
    Other current liabilities 28 597   (1,146) 451
    Other long-term liabilities 97 393   1,294 1,407
    Net cash from operations 5,942 5,604   26,994 24,073
    Financing      
    Short-term debt repayments,
    maturities of 90 days or less, net
    0 (545)   (186) (991)
    Proceeds from issuance of debt,
    maturities longer than 90 days
    0 1,575   6,960 4,167
    Repayments of debt, maturities
    longer than 90 days
    0 (1,088)   (814) (2,986)
    Common stock issued 180 912   2,422 2,311
    Common stock repurchased (1,256) (3,839)   (11,555) (11,269)
    Common stock cash dividends paid (1,350) (1,130)   (5,180) (4,578)
    Excess tax benefits from
    stock-based compensation
    3 7   17 45
    Other 0 10   (40) 10
    Net cash used in financing (2,423) (4,098)   (8,376) (13,291)
    Investing      
    Additions to property and equipment (642) (758)   (2,355) (1,977)
    Acquisition of companies, net of
    cash acquired
    (2) 0   (71) (245)
    Purchases of investments (8,286) (4,174)   (35,993) (30,168)
    Maturities of investments 1,905 1,005   6,897 7,453
    Sales of investments 6,112 2,420   15,880 15,125
    Securities lending payable (37) (2,612)   1,026 (1,502)
    Net cash used in investing (950) (4,119)   (14,616) (11,314)
    Effect of exchange rates on cash
    and cash equivalents
    20 (37)   103 (39)
    Net change in cash and cash
    equivalents
    2,589 (2,650)   4,105 (571)
    Cash and cash equivalents,
    beginning of period
    7,021 8,155   5,505 6,076
    Cash and cash equivalents, end of
    period
    $    9,610 $  5,505   $    9,610 $  5,505

     

     

    MICROSOFT CORPORATION
    Segment Revenue and Operating Income (Loss)
    (In millions) (Unaudited)
    Three Months Ended June 30, Twelve Months Ended June 30,
    2011 2010 2011 2010
    Revenue
    Windows & Windows Live Division $    4,740 $  4,781 $  19,024 $19,494
    Server and Tools 4,643 4,149 17,096 15,378
    Online Services Division 662 568 2,528 2,201
    Microsoft Business Division 5,777 5,375 22,186 19,076
    Entertainment and Devices Division 1,485 1,144 8,913 6,168
    Unallocated and other 60 22 196 167
    Consolidated $  17,367 $16,039 $  69,943 $62,484
    Operating income (loss)
    Windows & Windows Live Division $    2,943 $  3,066 $  12,281 $13,034
    Server and Tools 1,774 1,560 6,608 5,539
    Online Services Division (728) (688) (2,557) (2,337)
    Microsoft Business Division 3,618 3,219 14,124 11,504
    Entertainment and Devices Division 32 (172) 1,324 618
    Corporate-level activity (1,468) (1,055) (4,619) (4,260)
    Consolidated $    6,171 $  5,930 $  27,161 $24,098

     

    MICROSOFT CORPORATION

    FINANCIAL HIGHLIGHTS

    (Unaudited)

    Summary

    (In millions, except per share amounts and percentages)   Three Months Ended
    June 30,
        Percentage
    Change
        Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010           2011     2010      
    Revenue   $ 17,367     $ 16,039     8%     $ 69,943     $ 62,484     12%
    Operating income   $ 6,171     $ 5,930     4%     $ 27,161   $ 24,098     13%
    Diluted earnings per share   $ 0.69     $ 0.51     35%     $ 2.69     $ 2.10     28%

     

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Revenue increased primarily due to strong sales of Server and Tools products, the 2010 Microsoft Office system, and the Xbox 360 entertainment platform. Changes in foreign currency exchange rates had an insignificant impact on revenue.

    Operating income increased reflecting an increase in revenue, offset in part by higher operating expenses. Key changes in operating expenses were:

    •     Cost of revenue increased $538 million or 17%, primarily due to higher costs associated with our online offerings, including traffic acquisition costs and royalty costs relating to Xbox LIVE digital content, higher expenses from providing Enterprise Services, and increased volumes of Xbox 360 consoles sold.

    •     Sales and marketing expenses increased $314 million or 9%, primarily as a result of higher headcount-related expenses and increased fees paid to third party enterprise software advisors.

    •     General and administrative expenses increased $192 million or 19%, due primarily to new Puerto Rican excise taxes and higher headcount-related expenses.

    Diluted earnings per share increased reflecting higher revenue, lower income tax expense, and repurchases of common stock, offset in part by higher operating expenses.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Revenue increased primarily due to strong sales of the Xbox 360 entertainment platform, the 2010 Microsoft Office system, and Server and Tools products, offset in part by lower Windows revenue. Revenue also increased due to the fiscal year 2010 deferral of $254 million of revenue from earlier versions of the Microsoft Office system sold with a guarantee to be upgraded to the newest version of the Microsoft Office system at minimal or no cost (“Office Deferral”) and the subsequent recognition of the Office Deferral during fiscal year 2011. Changes in foreign currency exchange rates had an insignificant impact on revenue.

    Operating income increased reflecting the change in revenue, offset in part by higher operating expenses. Key changes in operating expenses were:

    •     Cost of revenue increased $3.2 billion or 26%, due to higher costs associated with our online offerings, including traffic acquisition costs, and increased volumes of Xbox 360 consoles and Kinect sensors sold.

    •     Sales and marketing expenses increased $726 million or 5%, primarily reflecting increased advertising and marketing of the Xbox 360 platform, Windows Phone, and Windows and Windows Live, higher headcount-related expenses and increased fees paid to third party enterprise software advisors.

    •     Research and development expenses increased $329 million or 4%, due mainly to higher headcount-related expenses.

    •    General and administrative expenses increased $159 million or 4%, due mainly to higher headcount-related expenses and new Puerto Rican excise taxes, partially offset by prior year transition expenses associated with the inception of the Yahoo! Commercial Agreement.

    Diluted earnings per share increased reflecting higher revenue, repurchases of common stock, and lower income tax expense, offset in part by higher operating expenses.

    SEGMENT PRODUCT REVENUE/OPERATING INCOME (LOSS)

    The revenue and operating income (loss) amounts in this section are presented on a basis consistent with accounting principles generally accepted in the U.S. and include certain reconciling items attributable to each of the segments. Certain corporate-level activity has been excluded from our segment operating results and is presented separately. Prior period amounts have been recast to conform to the way we internally managed and monitored performance at the segment level during the current period, including moving Microsoft’s PC hardware business from Entertainment and Devices Division to Windows & Windows Live Division, Windows Embedded from Entertainment and Devices Division to Server and Tools, and Office for Mac from Entertainment and Devices Division to Microsoft Business Division, as well as implementing intersegment cost allocations between all segments related to the collaborative investment in mobile platform development.

     

    Windows & Windows Live Division

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
      Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010         2011     2010      
    Revenue   $ 4,740   $ 4,781     (1)%   $ 19,024   $ 19,494     (2)%
    Operating income   $ 2,943   $ 3,066     (4)%   $ 12,281   $ 13,034     (6)%

     

    Windows & Windows Live Division (“Windows Division”) develops and markets PC operating systems, related software and online services, and PC hardware products. This collection of software, hardware, and services is designed to simplify everyday tasks through efficient browsing capabilities and seamless operations across the user’s hardware and software. Windows Division offerings consist of multiple editions of the Windows operating system, software and services through Windows Live, and Microsoft PC hardware products.

    Windows Division revenue is largely correlated to the PC market worldwide, as approximately 75% of total Windows Division revenue comes from Windows operating system software purchased by original equipment manufacturers (“OEMs”) which they pre-install on equipment they sell. The remaining approximately 25% of Windows Division revenue (“other revenue”) is generated by commercial and retail sales of Windows and PC hardware products and online advertising from Windows Live.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Windows Division revenue reflected relative performance in PC market segments. We estimate that sales of PCs to businesses grew approximately 8% this quarter and sales of PCs to consumers declined approximately 2%. The decline in consumer PC sales included an approximately 41% decline in the sales of netbooks. Taken together, the total PC market increased an estimated 1% to 3%. Revenue was negatively impacted by the effect of higher growth in emerging markets, where average selling prices are lower, relative to developed markets, and by lower recognition of previously deferred Windows XP revenue. This quarter, we experienced increased attachment of Windows to PCs shipped, particularly in emerging markets.

    Windows Division operating income decreased as a result of decreased revenue and higher sales and marketing expenses. Sales and marketing expenses increased $52 million or 7% reflecting increased advertising of Windows and Windows Live.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Windows Division revenue reflected relative performance in PC market segments. We estimate that sales of PCs to businesses grew approximately 11% this year and sales of PCs to consumers declined approximately 1%. The decline in consumer PC sales included an approximately 32% decline in the sales of netbooks. Taken together, the total PC market increased an estimated 2% to 4%. Revenue was negatively impacted by the effect of higher growth in emerging markets, where average selling prices are lower, relative to developed markets, and by lower recognition of previously deferred Windows XP revenue. Considering the impact of Windows 7 launch in the prior year, including $273 million of revenue recognized related to the Windows 7 Deferral, we estimate that Windows Division revenue was in line with the PC market.

    Windows Division operating income decreased as a result of decreased revenue and higher sales and marketing expenses. Sales and marketing expenses increased $224 million or 8% reflecting increased advertising of Windows and Windows Live.

    Server and Tools

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
      Twelve Months Ended
    June 30,
        Percentage
    Change

     

                 
        2011     2010         2011     2010      
    Revenue   $ 4,643   $ 4,149     12%   $ 17,096   $ 15,378     11%
    Operating income   $ 1,774   $ 1,560     14%   $ 6,608   $ 5,539     19%

     

    Server and Tools develops and markets technology and related services that enable information technology professionals and their systems to be more productive and efficient. Server and Tools product and service offerings include Windows Server, Microsoft SQL Server, Windows Azure, Visual Studio, System Center products, Windows Embedded device platforms, and Enterprise Services. Enterprise Services comprise Premier product support services and Microsoft Consulting Services. We also offer developer tools, training and certification. Approximately 50% of Server and Tools revenue comes primarily from multi-year volume licensing agreements, approximately 30% is purchased through transactional volume licensing programs, retail packaged product and licenses sold to OEMs, and the remainder comes from Enterprise Services.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Server and Tools revenue increased reflecting growth in both product sales and Enterprise Services. Product revenue increased $382 million or 11%, driven primarily by growth in Windows Server, SQL Server, and Enterprise Client Access License (“CAL”) Suites, reflecting continued adoption of Windows platform applications. Enterprise Services revenue grew $112 million or 14%, due to growth in both Premier product support and consulting services.

    Server and Tools operating income increased due to revenue growth, offset in part by higher operating expenses. Sales and marketing expenses increased $149 million or 13% reflecting increased corporate marketing activities and fees paid to third party enterprise software advisors. Cost of revenue increased $133 million or 18%, primarily reflecting a $114 million increase in expenses from providing Enterprise Services.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Server and Tools revenue increased reflecting growth in both product sales and Enterprise Services. Product revenue increased $1.4 billion or 11%, driven primarily by growth in Windows Server, SQL Server, Enterprise CAL Suites, and Windows Embedded, reflecting continued adoption of Windows platform applications. Enterprise Services revenue grew $337 million or 11%, due to growth in both Premier product support and consulting services.

    Server and Tools operating income increased due to revenue growth, offset in part by higher operating expenses. Cost of revenue increased $366 million or 13%, primarily reflecting a $323 million increase in expenses from providing Enterprise Services. Sales and marketing expenses increased $264 million or 6% reflecting increased fees paid to third party enterprise software advisors and increased corporate marketing activities.

    Online Services Division

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
      Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010         2011     2010      
    Revenue   $ 662   $ 568     17%   $ 2,528   $ 2,201     15%
    Operating loss   $ (728 )   $ (688 )   (6)%   $ (2,557 )   $ (2,337 )   (9)%

     

    Online Services Division (“OSD”) develops and markets information and content designed to help people simplify tasks and make more informed decisions online, and that help advertisers connect with audiences. OSD offerings include Bing, MSN, adCenter, and advertiser tools. Bing and MSN generate revenue through the sale of search and display advertising. Search and display advertising generally accounts for over 85% of OSD’s annual revenue.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    OSD revenue increased primarily as a result of growth in online advertising revenue. Online advertising revenue grew $100 million or 20% to $597 million, reflecting continued growth in search and display advertising revenue, offset in part by decreased third party advertising revenue. Search revenue grew due to increased volumes reflecting general market growth, relative share gains in the U.S, and our Yahoo! alliance, offset in part by decreased revenue per search primarily related to challenges associated with optimizing the adCenter platform for the new mix and volume of traffic from the combined Yahoo! and Bing properties. As of June 30, 2011, according to third-party sources, Bing organic U.S. market share grew over 31% to approximately 14%, while Bing-powered U.S. market share, including Yahoo! properties, was approximately 27%.

    OSD operating loss increased due to higher cost of revenue, offset in part by increased revenue. Cost of revenue grew $165 million, driven by costs associated with the Yahoo! search agreement and increased traffic acquisition costs.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    OSD revenue increased primarily as a result of growth in online advertising revenue. Online advertising revenue grew $358 million or 19% to $2.3 billion, reflecting continued growth in search and display advertising revenue, offset in part by decreased third party advertising revenue. Search revenue grew due to increased volumes reflecting general market growth, relative share gains in the U.S., and our Yahoo! alliance, offset in part by decreased revenue per search primarily related to challenges associated with optimizing the adCenter platform for the new mix and volume of traffic from the combined Yahoo! and Bing properties. As of June 30, 2011, according to third-party sources, Bing organic U.S. market share grew over 31% to approximately 14%, while Bing-powered U.S. market share, including Yahoo! properties, was approximately 27%.

    OSD operating loss increased due to higher operating expenses, offset in part by increased revenue. Cost of revenue grew $641 million driven by costs associated with the Yahoo! search agreement and increased traffic acquisition costs. General and administrative expenses decreased $157 million or 60% due mainly to transition expenses in the prior year associated with the inception of the Yahoo! Commercial Agreement. Research and development increased $117 million or 11% due to increased headcount-related costs.

    Microsoft Business Division

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
      Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010         2011     2010      
    Revenue   $ 5,777   $ 5,375     7%   $ 22,186   $ 19,076     16%
    Operating income   $ 3,618   $ 3,219     12%   $ 14,124   $ 11,504     23%

     

    Microsoft Business Division (“MBD”) develops and markets software and services designed to increase personal, team, and organization productivity. MBD offerings include the Microsoft Office system (comprising mainly Office, SharePoint, Exchange and Lync), which generates over 90% of MBD revenue, and Microsoft Dynamics business solutions. We evaluate MBD results based upon the nature of the end user in two primary parts: business revenue, which includes Microsoft Office system revenue generated through volume licensing agreements and Microsoft Dynamics revenue; and consumer revenue, which includes revenue from retail packaged product sales and OEM revenue.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    MBD revenue increased reflecting sales of the 2010 Microsoft Office system, which was released primarily during the fourth quarter of fiscal year 2010. Consumer revenue decreased $93 million or 8%, primarily driven by a decline in consumer PC sales in developed markets. Business revenue increased $494 million or 12%, primarily reflecting licensing of the 2010 Microsoft Office system to transactional business customers, growth in multi-year volume licensing revenue, and a 19% increase in Microsoft Dynamics revenue.

    MBD operating income increased due mainly to revenue growth as well as decreased sales and marketing expenses, offset in part by higher cost of revenue. Sales and marketing expenses decreased $74 million or 6%, due mainly to decreased advertising and marketing activities. Cost of revenue increased $83 million or 22%, primarily driven by higher online costs and services.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    MBD revenue increased primarily reflecting sales of the 2010 Microsoft Office system, the $254 million Office Deferral during fiscal year 2010, and the subsequent recognition of the Office Deferral during fiscal year 2011. Business revenue increased $2.0 billion or 13%, reflecting licensing of the 2010 Microsoft Office system to transactional business customers, growth in multi-year volume licensing revenue, and a 10% increase in Microsoft Dynamics revenue. Consumer revenue increased $1.1 billion or 33%, approximately half of which was attributable to the launch of Office 2010 and half of which was attributable to the Office Deferral during fiscal year 2010 and subsequent recognition of the Office Deferral during fiscal year 2011. Excluding the impact associated with the Office Deferral, consumer revenue increased $620 million or 17% due to sales of the 2010 Microsoft Office system.

    MBD operating income increased due mainly to revenue growth, offset in part by higher operating expenses. Cost of revenue increased $335 million or 26%, primarily driven by higher online costs and services. Sales and marketing expenses increased $97 million or 2%, primarily driven by an increase in corporate and cross-platform marketing activities. Research and development costs increased $79 million or 4%, primarily as a result of capitalization of certain Microsoft Office system software development costs in the prior year.

     

    Entertainment and Devices Division

     

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
      Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010         2011     2010      
    Revenue   $ 1,485   $ 1,144     30%   $ 8,913   $ 6,168     45%
    Operating income (loss)   $ 32   $ (172 )   *   $ 1,324   $ 618     114%

     

    *       Not meaningful

    Entertainment and Devices Division (“EDD”) develops and markets products and services designed to entertain and connect people. EDD offerings include the Xbox 360 entertainment platform (which includes the Xbox 360 gaming and entertainment console, Kinect for Xbox 360, Xbox 360 video games, Xbox LIVE, and Xbox 360 accessories), Mediaroom (our Internet protocol television software), and Windows Phone. In November 2010, we released Kinect for Xbox 360 and the latest version of Windows Phone.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    EDD revenue increased primarily reflecting higher Xbox 360 platform revenue. Xbox 360 platform revenue grew $293 million or 29%, led by higher Xbox LIVE revenue and increased volumes of Xbox 360 consoles sold. We shipped 1.7 million Xbox 360 consoles during the fourth quarter of fiscal year 2011, compared with 1.5 million Xbox 360 consoles during the fourth quarter of fiscal year 2010.

    EDD operating income increased primarily reflecting revenue growth, offset in part by higher cost of revenue. Cost of revenue increased $118 million or 15% primarily reflecting higher volumes of Xbox 360 consoles, and increased royalty costs resulting from increased sales of Xbox LIVE digital content.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    EDD revenue increased primarily reflecting higher Xbox 360 platform revenue. Xbox 360 platform revenue grew $2.7 billion or 48%, led by increased volumes of Xbox 360 consoles, sales of Kinect sensors, and higher Xbox LIVE revenue. We shipped 13.7 million Xbox 360 consoles during fiscal year 2011, compared with 10.3 million Xbox 360 consoles during fiscal year 2010.

    EDD operating income increased primarily reflecting revenue growth, offset in part by higher cost of revenue. Cost of revenue increased $1.8 billion or 49% primarily reflecting higher volumes of Xbox 360 consoles and Kinect sensors sold, and increased royalty costs resulting from increased sales of Xbox LIVE digital content. Research and development expenses increased $119 million or 12%, primarily reflecting higher headcount-related costs. Sales and marketing expenses grew $90 million or 12% primarily reflecting increased Xbox 360 platform marketing activities.

    Corporate-Level Activity

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
          Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010             2011     2010      
    Corporate-level activity   $ (1,468 )   $ (1,055 )   (39)%       $ (4,619 )   $ (4,260 )   (8)%

     

    Certain corporate-level activity is not allocated to our segments, including costs of: broad-based sales and marketing; product support services; human resources; legal; finance; information technology; corporate development and procurement activities; research and development; and legal settlements and contingencies.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Corporate-level expenses increased due mainly to new Puerto Rican excise taxes, certain revenue related sales and marketing expenses, and increased headcount-related expenses.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Corporate-level expenses increased due mainly to new Puerto Rican excise taxes, certain revenue related sales and marketing expenses, and increased headcount-related expenses. These increases were offset in part by lower legal charges, which were $332 million in fiscal year 2011 compared to $533 million in fiscal year 2010.

    OPERATING EXPENSES

    Cost of Revenue

    (In millions, except percentages) Three Months Ended
    June 30,
    Percentage
    Change
    Twelve Months Ended
    June 30,
    Percentage
    Change

     

        2011     2010             2011     2010      
    Cost of revenue   $ 3,708   $ 3,170     17%       $ 15,577   $ 12,395     26%
    As a percent of revenue   21 %     20 %   1ppt       22 %     20 %   2ppt

     

    Cost of revenue includes: manufacturing and distribution costs for products sold and programs licensed; operating costs related to product support service centers and product distribution centers; costs incurred to include software on PCs sold by OEMs, to drive traffic to our Web sites, and to acquire online advertising space (“traffic acquisition costs”); costs incurred to support and maintain Internet-based products and services, including royalties; warranty costs; inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized research and development costs.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Cost of revenue increased primarily due to higher costs associated with our online offerings, including traffic acquisition costs, and higher expenses from providing Enterprise Services, as well as increased volumes of Xbox 360 consoles sold and royalty costs relating to Xbox LIVE digital content sold.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Cost of revenue increased primarily due to increased volumes of Xbox 360 consoles and Kinect sensors sold, higher costs associated with our online offerings, including traffic acquisition costs, and higher expenses from providing Enterprise Services, as well as royalty costs relating to Xbox LIVE digital content sold.

     

    Research and Development

     

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
          Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010             2011     2010      
    Research and development   $ 2,393   $ 2,350     2%       $ 9,043   $ 8,714     4%
    As a percent of revenue   14 %     15 %   (1)ppt       13 %     14 %   (1)ppt

     

    Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Research and development expenses increased primarily due to an 8% increase in headcount-related expenses and the capitalization of certain software development costs in the prior year.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Research and development expenses increased primarily due to a 5% increase in headcount-related expenses and the capitalization of certain software development costs in the prior year.

    Sales and Marketing

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
          Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010             2011     2010      
    Sales and marketing   $ 3,916     $ 3,602     9%       $ 13,940     $ 13,214     5%
    As a percent of revenue   23 %     22 %   1ppt       20 %     21 %   (1)ppt

     

    Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with sales and marketing personnel and the costs of advertising, promotions, trade shows, seminars, and other programs.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Sales and marketing expenses increased primarily as a result of a 12% increase in headcount-related expenses and increased fees paid to third party enterprise software advisors.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Sales and marketing expenses increased primarily as a result of increased advertising and marketing of the Xbox 360 platform, Windows Phone, and Windows and Windows Live, a 5% increase in headcount-related expenses, and increased fees paid to third party enterprise software advisors.

    General and Administrative

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
          Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010             2011     2010      
    General and administrative   $ 1,179     $ 987     19%       $ 4,222     $ 4,063     4%
    As a percent of revenue   7 %     6 %   1ppt       6 %     7 %   (1)ppt

     

    General and administrative expenses include payroll, employee benefits, stock-based compensation expense, severance expense, and other headcount-related expenses associated with finance, legal, facilities, certain human resources and other administrative personnel, certain taxes, and legal and other administrative fees.

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    General and administrative expenses increased primarily due to new Puerto Rican excise taxes and a 17% increase in headcount-related expenses.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    General and administrative expenses increased primarily due to a 12% increase in headcount-related expenses and new Puerto Rican excise taxes, partially offset by prior year transition expenses associated with the inception of the Yahoo! Commercial Agreement.

    OTHER INCOME (EXPENSE) AND INCOME TAXES

    Other Income (Expense)

    The components of other income (expense) were as follows:

    (In millions, except percentages)   Three Months Ended
    June 30,
        Percentage
    Change
          Twelve Months Ended
    June 30,
        Percentage
    Change

     

        2011     2010             2011     2010      
    Dividends and interest income   $ 269   $ 239     13 %       $ 900   $ 843     7 %
    Interest expense   (94 )     (37 )   (154)%       (295 )     (151 )   (95)%
    Net recognized gains on investments   100     49     104%       439     348     26%
    Net losses on derivatives   (115 )     (163 )   29%       (77 )     (140 )   45%
    Net gains (losses) on foreign currency
    remeasurements
      (12 )     25     *       (26 )   1     *
    Other   0       (19 )   *       (31 )     14     *

     

       

     

     

               

     

     

       

     

     

         
    Total   $ 148     $ 94     57%       $ 910   $ 915     (1)%
       

     

     

       

     

     

               

     

     

       

     

     

         

    *  Not meaningful

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Dividends and interest income increased due to higher average portfolio investment balances, offset in part by lower yields on our fixed income investments. Interest expense increased due to our increased issuance of debt. Net recognized gains on investments increased due primarily to higher gains on sales of fixed-income and equity securities. Derivative losses decreased due primarily to lower losses on currency contracts used to hedge foreign currency revenues and interest-rate and equity derivatives, offset in part by higher losses on commodity derivatives.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Dividends and interest income increased due to higher average portfolio investment balances, offset in part by lower yields on our fixed income investments. Interest expense increased due to our increased issuance of debt. Net recognized gains on investments increased due primarily to higher gains on sales of equity securities, offset in part by fewer gains on sales of fixed-income securities. Derivative losses decreased due primarily to higher gains on commodity derivatives offset in part by higher losses on currency contracts used to hedge foreign currency revenue.

    Income Taxes

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Our effective tax rates for the fourth quarters of fiscal years 2011 and 2010 were approximately 7% and 25%, respectively. Our effective tax rate was lower than the U.S. federal statutory rate primarily due to a higher mix of earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland, Singapore and Puerto Rico, which are subject to lower income tax rates.

    Our effective tax rate was lower than in the prior year due mainly to the adjustment of our previously estimated effective tax rate for the year to reflect the actual full year mix of foreign and U.S. taxable income. In addition, upon completion of our annual domestic and foreign tax returns, we adjusted the estimated tax provision to reflect the tax returns filed and recorded an income tax benefit which lowered our effective tax rate.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Our effective tax rates for fiscal years 2011 and 2010 were approximately 18% and 25%, respectively. Our effective tax rate was lower than the U.S. federal statutory rate and our prior year effective rate primarily due to a higher mix of earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland, Singapore, and Puerto Rico, which are subject to lower income tax rates. In fiscal years 2011 and 2010, our U.S. income before income taxes was $8.9 billion and $9.6 billion, respectively, and comprised 32% and 38%, respectively, of our income before income taxes. In fiscal years 2011 and 2010, the foreign income before income taxes was $19.2 billion and $15.4 billion, respectively, and comprised 68% and 62%, respectively, of our income before income taxes. In fiscal years 2011 and 2010, the reduction of the U.S. federal statutory rate as a result of foreign earnings taxed at lower rates was 16% and 12%, respectively.

    In addition, our effective tax rate was lower than in the prior year due to a partial settlement with the I.R.S. in the third quarter of fiscal year 2011 relating to the audit of tax years 2004 to 2006. This partial settlement reduced our income tax expense for fiscal year 2011 by $461 million.

    UNEARNED REVENUE

    Unearned revenue at June 30, 2011 comprised mainly unearned revenue from volume licensing programs. Unearned revenue from volume licensing programs represents customer billings for multi-year licensing arrangements paid for either at inception of the agreement or annually at the beginning of each billing coverage period and accounted for as subscriptions with revenue recognized ratably over the billing coverage period. Unearned revenue at June 30, 2011 also included payments for: post-delivery support and consulting services to be performed in the future; Xbox LIVE subscriptions and prepaid points; Microsoft Dynamics business solutions products; OEM minimum commitments; unspecified upgrades/enhancements of Windows Phone and Microsoft Internet Explorer on a when-and-if-available basis for Windows XP; and other offerings for which we have been paid in advance and earn the revenue when we provide the service or software, or otherwise meet the revenue recognition criteria.

     

    The following table outlines the expected future recognition of unearned revenue as of June 30, 2011:

    (In millions)      

     

     
    Three Months Ending,      
       
    September 30, 2011   $ 5,979  
    December 31, 2011     4,914  
    March 31, 2012     3,207  
    June 30, 2012     1,622  
    Thereafter     1,398  

     

     
    Total   $ 17,120  
       

     

     

     

    CASH FLOWS

    Three months ended June 30, 2011 compared with three months ended June 30, 2010

    Fourth quarter cash flows from operations increased $338 million over the prior year to $5.9 billion due mainly to increased revenue and cash collections from customers, offset in part by other changes in working capital. Cash used in financing decreased $1.7 billion to $2.4 billion due mainly to a $2.6 billion decrease in common stock repurchases, offset in part by reduced proceeds from issuances of common stock of $732 million. Cash used in investing decreased $3.2 billion to $1.0 billion due mainly to a $2.6 billion increase in cash from securities lending.

    Twelve months ended June 30, 2011 compared with twelve months ended June 30, 2010

    Cash flows from operations increased $2.9 billion during the current fiscal year to $27.0 billion due mainly to increased revenue and cash collections from customers. Cash used in financing decreased $4.9 billion to $8.4 billion due mainly to a $5.8 billion increase in proceeds from issuances of debt, net of repayments, offset in part by a $602 million increase in cash paid for dividends. Cash used in investing increased $3.3 billion to $14.6 billion due to a $5.8 billion increase in purchases of investments, offset in part by a $2.5 billion increase in cash from securities lending.

     

  • Xbox 720 to be Revealed at E3 2012?

    At the recently completed E3 gaming conference, it was Nintendo that focused on new hardware. They announced their Wii U next-gen console that will boast full HD capabilities, a super fast processor and a touch-screen controller. Microsoft’s keynote at the event focused on the Kinect and on upcoming game titles, with no mention of any successor to the their top-selling Xbox 360.

    Although Microsoft has said that the 360 is only halfway through its life-cycle, we may be getting a new console sooner than we think.

    Based on information from a “high-ranking industry source” at video game and engine developers Crytek, Microsoft will reveal their next-gen console in 2012, likely at E3.

    VideoGamer reports that the Crytek source says that they are “investing resources” into both Microsoft’s next-gen console and Sony’s, but they expect Microsoft to reveal their hardware sooner.

    How does Crytek know this? The company, who is behind hits like Crysis, is apparently using their CryEngine 3 to produce TimeSplitters 4 (omg, a new TimeSplitters!), specifically for the next Xbox console. The next-gen Xbox is colloquially called the 720 in the same way that people refer to the upcoming PlayStation console as the PS4. It’s highly unlikely that it will actually be called the 720, but who knows? (I mean, who could’ve guess the Wii U?)

    Said to be part of the new hardware is Microsoft’s DirectX 11, which sports Tessellation, multithreaded rendering and compute shaders. This is said to have a “huge impact” on the graphics. There aren’t any other details on other specifications yet.

    Another hint that new hardware is in the works came in the form of job postings a few months ago. WinRumors found some postings on LinkedIn from the Xbox Console Architecture Team looking for a graphics hardware architect, and performance architect, and a hardware verification engineer.

    Microsoft doesn’t really have any reason to rush out a new console. The Xbox 360 is doing just fine. It’s the top selling console in the U.S. and is the only console in recent history to post sales growth entering its 6th year on the market. They have sold over 55 million 360s in over 38 countries worldwide.

    Let the speculation begin.

    [Lead Image Courtesy]

  • Bing for Xbox is Smart Move, But Microsoft Should Go Further

    This week, Microsoft announced it would be bringing Bing search to the Xbox later this year- kind of. I say kind of, because it’s not the full Bing search engine.

    There are already a lot of wheels in motion, which could significantly boost Bing’s share of the search market. The Facebook integration recently launched (and now being advertised on television) should help to some extent. Deals with Nokia and RIM to make Bing the default search engine on more mobile devices should help a lot.

    Bing on Xbox could be huge, as the Xbox is a gateway to online access from the living room – and a very common one, when compared to something like Google TV. That said, Microsoft has limited the Bing experience to certain apps on the Xbox, as opposed to the entire web, and for that reason, this won’t be as big a boost to Bing’s market share as it would be if they simply put a full web browser on the device with Bing as the default search, or simply offering a Bing app that accesses the entire web.

    Still, it will be powerful for continuing to build the Bing brand, and I’m sure they will find additional uses for it as time goes on. It will start by searching things like games, videos, and music through apps like Netflix, Hulu Plus, ESPN, YouTube, Zune, etc. In all fairness, these are the types of content that are most likely to be accessed through TV on a regular basis, but Bing has a lot more to offer as a search engine, and it seems like they’re holding back here. How about shopping, for instance?

    Here’s the relevant Bing for Xbox portion from Microsoft’s E3 presentation (courtesy of WinRumors):

    Again, I have a feeling this is just the beginning of what we’ll see in terms of Bing/Xbox integration, and it’s smart on Microsoft’s part to simply get Bing on there in some capacity. The company has a lot invested in the success of Bing, and Xbox is about the best thing the company has going for it right now, as the latest earnings report indicated.

  • While Sony Struggles, Xbox Helps You Try on Clothes

    The recent legacy of the Sony Playstation and its related troubles have been well documented — and discussed — here. The once-open system has now sunken into a quagmire of a failed network and heavy-handed legal tactics, all in an effort to apparently prevent piracy. Meanwhile, the Xbox culture continues to roll on, unimpeded, red ring of death be damned.

    Although Microsoft remained silent on Sony’s recent issues, they did invite hackers to come up with new uses for the Xbox and its latest peripheral, the Kinect. Talk about different approaches to a customer base. Sony would rather embark misguided attempts in an effort to control every aspect of the PS3, even after they’ve already been purchased, regardless of the hypocrisy involved in their actions. Remember, when PS3s were first launched, owners — not borrowers, mind you — could install Linux on them.

    Now, not so much.

    Now, we have Microsoft playing the part of supportive company that invites creativity, a stance that’s pretty surprising considering the way they control the Windows property. With the Xbox Kinect, however, company developers have been incredibly supportive of user hacks, inviting those who are capable to create something above and beyond for the console’s environment. Apparently, it this kind of invitation that inspired the developers at AR Door to create a Kinect hack that turns the Xbox into a virtual fitting room.

    According to the site, the hack is being used in conjunction with the Topshop retail clothes store, and it allows would-be customers to try on a variety of outfits, all without removing one article of real clothing, or waiting on a dressing room to open up. The site reveals more about the virtual dressing room hack:

    The virtual fitting room is built on the most sophisticated technologies: augmented reality and Microsoft Kinect. Augmented reality allows the customers to select a garment off the rack without having to try it on physically. As a customer, you see yourself onscreen with a 3D copy of a dress. Kinect allows the user to control the program by simple gestures pushing virtual buttons right in the air.

    Not only that, but would-be shoppers can view the front and the back of the article they are trying on, giving them a much better idea of the clothing’s fit and look, without having to twist their necks into weird angles. There is, naturally, a video of the process in action, which, once again, would not be possible without Microsoft’s open approach to hackers and their abilities in relation to the Xbox environment:


    So is this what GeoHot had in mind when he initially hacked the PS3 OS? Doubtful, but should Sony be so strong-armed about the process either? There’s nothing at all wrong with wanting to police your service for pirates and those playing stolen games, but perhaps the smart strategy is to avoid alienating the entire culture of console hackers, people who aren’t just hacking their console in order to play a free copy of Call of Duty: Black Ops.

    Believe it or not, these folks exist as well. Just re-watch the above video if you need further proof.

  • PayPal Service Coming To Xbox Live

    PayPal Service Coming To Xbox Live

    For those of you who would like an additional method of purchasing on your Xbox Live account, Microsoft has apparently heard your calling, and will address your needs when the next XBL update occurs. Currently, the next update is scheduled for the 19th of May.

    Currently, XBL subscribers use personal credit cards to buy points, which, in turn allows them to purchase items from the Xbox marketplace. Points can also be acquired through gift cards, but these are the primary methods for acquiring goods on XBL. That, however, is about to change once the latest dashboard update is in place. Thanks to a mailing received by Joystiq.com, courtesy of a member of the Microsoft team, it has been revealed that PayPal will be soon be available as a method of payment for XBL members.

    A screenshot of the mailing in question reveals the details:

    XBox Mail

    A post from GamePro.com reveals PayPal is already accepted by Microsoft billing, however, the once the dashboard update is complete, it should move this capability directly to the console.

    While the PayPal inclusion is the “only user facing feature” of the May 19th update — which will actually take place with six separate updates, going from May 19th to May 30th — the mailing also details upcoming support for the Xbox Game Disc Format (XGD3). According to text, XGD3 “allows for additional storage space on a game disc, and provides additional layers of copy protection.”

    Considering how the technological world works, it wouldn’t be a bit surprising if these “additional layers of copy protection” were already circumvented.

    Hackers-versus-copyright battles aside, the upcoming addition of PayPal to the XBL experience provides at least one option for subscribers: the ability to protecting personal credit card numbers just in case XBL is ever hacked. Granted, the PayPal information would be available, but one little change of the PayPal password eliminates this information from being useful.

  • Microsoft Reports Strong Q3 Results, Thanks Xbox

    Microsoft has released its report on third-quarter earnings today, and they show record results.

    Q3 revenue is reported at $16.43 for the quarter which ended on March 31st.  This is a 13% increase year-over-year.  More results:

    Operating income, net income, and diluted earnings per share for the quarter were $5.71 billion, $5.23 billion, and $0.61 per share, which represented increases of 10%, 31%, and 36%, respectively, when compared with the prior year period. Diluted earnings per share included a $0.05 tax benefit primarily related to an agreement with the U.S. Internal Revenue Service to settle a portion of their audit of tax years 2004 to 2006.

    “We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” said Peter Klein, chief financial officer at Microsoft. “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”

    Categorically, Microsoft delivered revenue increases in each division.  On the heels of Office 2010, Microsoft Business Division revenue grew 21% year-over-year.  Server & Tools revenue grew 11& year-over-year.  They report that Windows 7 remains the fastest selling OS in history with a very impressive 350 million licenses sold.

    On the back of Bing’s expansion to 13.9% of the search share, Microsoft’s Online Services Division revenue grew 14% year-over-year.

    The real star, however, is the Entertainment & Devices Division.  Fueled by Kinect sales, Xbox console sales and Xbox Live subscriptions, it grew 60% year-over-year.  They say that the Kinect is the fastest selling consumer electronics device in history.

    Microsoft isn’t the only company to post strong quarter earnings.  Yesterday, e-commerce giant eBay posted very strong Q1 earnings of $2.5 billion in net revenue.

    And with the PlayStation Network looking like it’ll be down for another week, maybe frustrated PS3 users will jump ship and switch to Xbox, who knows.  I guess we will see when Microsoft reports its Q4 earnings on July 21st. 

  • Microsoft 2010 By the Numbers

    Microsoft made a slew of announcements at the Consumer Electronics Show (CES). More on that here. The company also revealed a bunch of numbers for 2010 that you might find interesting. 

    So, let’s get right to them:

    Xbox/Kinect

    – 8 million: Number of Kinects sold in first 60 days

    – 50 million: Xbox 360s sold to date

    – 30 million: Number of Xbox LIVE members 

    Windows Phone 7

    – 100: Average number of new apps in the marketplace each day

    – 5,500: Apps available in the Windows Phone 7 Marketplace

    – 20,000: Developers registered to develop apps for Windows Phone 7

    – 1.5 million: Windows Phone 7s sold by phone manufacturers in the first six weeks after launch

    – 60: Number of mobile operators that carry Windows Phone 7

    – 30: Number of countries where Windows Phone 7 is available

    Search Buttons on Windows Phone Devices Take Users to Bing

    Windows 7

    – 7: number of Windows 7 licenses sold per second

    – 20 million: Number of downloads of Internet Explorer 9 beta

    – 500 million+: Number of Windows Live users worldwide

    – 20: Percentage of PCs connected to the Internet running Windows 7

    There are no new Bing numbers to report, unfortunately, though Microsoft CEO Steve Ballmer did acknowledge the search engine’s healthy growth in 2010. It is powering Yahoo Search and Facebook’s web search.

  • Microsoft Announcements from CES

    The Consumer Elecronics Show (CES) in Vegas has already been a big event for Microsoft, and it doesn’t even end until January 9. CEO Steve Ballmer reflected on the past year, and introduced some elements of where the company is headed. 

    "(It) was a very, very exciting year for our customers," Ballmer said. "We launched Windows Phone 7, Office 2010, and Kinect, and we introduced Internet Explorer 9 and Office 365. We saw great growth in our Bing and Azure services, and with the amazing success of Windows 7, it’s truly been a year like none other." Microsoft has a billion customers, the company says. 

    "The products that I mentioned resulted from big technology bets that we’ve made," added Ballmer. "Bets on the cloud, natural user interface, new smart client technology, machine learning."

    Here’s Steve Ballmer’s Keynote:

    So what’s coming from Microsoft? 

    The Next Windows

    The next version of Windows will support System on a Chip (SoC) architectures, including ARM-based systems from NVIDIA, Qualcomm and Texas Instruments, the company announced. 

    "With today’s announcement, we’re showing the flexibility and resiliency of Windows through the power of software and a commitment to world-class engineering. We continue to evolve Windows to deliver the functionality customers demand across the widest variety of hardware platforms and form factors," said Steven Sinofsky, president of the Windows and Windows Live Division at Microsoft."

    More on this here.

    Tablets

    Ballmer introduced a new lineup of Windows 7 tablets. Including: a dual-screen PC from Acer, the Samsung PC 7 Sliding Series, and an Asus Tablet PC. Mashable has a good write up on these

    It will be interesting to see how the devices compete with the iPad in the future. My hunch is that when combined, they will do just fine. As long as consumers are using tablets with Windows, Microsoft will be happy. 

    Surface

    Microsoft and Samsung unveiled the next generation of Surface, giving LCD panels "the power to see without the use of cameras." People can share and collaborate using a large, thin display that recognizes fingers, hands and other objects placed on the screen. More on this here.

    Xbox/Kinect

    The company is aiming for Xbox to become the "hub of your living room". They announced new Kinect-enabled entertainment experiences, and new Xbox Live gaming titles. Hulu Plus will also be coming to Xbox Live.

    "It is your gaming system, but it’s your movies, it’s your TV shows, and it’s your sporting events. It’s your social interactions, all delivered directly to the biggest screen in your house."

    The Xbox team introduced a new social experience called Avatar Kinect that will use Kinect’s camera and sensor and facial recognition technology to let a person control their avatar’s movements and expressions; when they smile, frown, nod and speak.  More on this here.

    The company also affirmed a commitment to gaming on other platforms like the PC and Windows Phone 7.

  • Microsoft Appoints New Division Leaders

    Microsoft Appoints New Division Leaders

    Microsoft announced some new leadership promotions today. The company promoted Kurt DelBene to president of the Microsoft Office Division, Andy Lees to president of the Mobile Communications Business, and Don Mattrick to president of the Interactive Entertainment Business.

    "Today’s promotions underscore the strength of Microsoft’s collective leadership team and set us up well to execute against a powerful lineup of products this fall," said CEO Steve Ballmer. "Not only is the team ready to capitalize on major momentum with our existing products like Office, SharePoint and Halo: Reach, but they are simultaneously bringing entirely new experiences to market with Windows Phone 7 and Kinect for Xbox 360."

    DelbeneDelBene has been with Microsoft for 18 years. Most recently, he led the engineering and development teams for the Microsoft Business Division, including the development of the recently launched Office 2010 products and services.

    The company is quick to point out that Office 2010 has already become the fastest selling consumer version of Office. As president, DelBene assumes responsibility for the Microsoft Office Division, including both the engineering and marketing functions for clients, servers and services for information workers, including Office, Exchange, SharePoint, Lync, Project, Visio and Microsoft’s speech technology investment.

    Lees has been with the company for 20 years. He has been at the center of the development of Windows Phone 7. He’ll continue to oversee the overall product development and marketing of the company’s mobility efforts. 

    Mattrick doesn’t have as much history with the company,having joined in just 2007, leading the Interactive Entertainment business for Microsoft. He’ll oversee Xbox 360, Xbox LIVE, Kinect, Zune Music and Video, and Mediaroom, as well as PC and mobile interactive entertainment.

  • Kinect to Launch with Campaigns from Chevy, Sprint & T-Mobile

    It turns out Microsoft’s Kinect, the Xbox add-on that lets users play games without controllers, is not just entertainment for users, but an interesting advertising platform for businesses. Microsoft revealed some campaigns from Chevorlet, Sprint and T-Mobile, which will launch with Kinect on November 4. 

    "With Kinect for Xbox 360, we are removing the last barrier to interactive television — the controller," said Mark Kroese, general manager of the Interactive Entertainment Advertising Business Group at Microsoft. "We have seen tremendous momentum from the advertising community, including big campaigns from Chevrolet, Sprint and T-Mobile. These visionary marketers are leading the entertainment revolution with ground-breaking campaigns that are highly engaging."

    For Chevy’s campaign, Kinect users will be able to test-drive the Chevrolet Volt in the game Kinect Joy Ride. In addition to this, after viewing a video ad on Xbox LIVE or on the Web, users will be able to unlock and download  Chevrolet Cruze, Camaro and Corvette cars to drive in the game. Chevy will follow that up with a New Year campaign in the Kinect Hub showcasing the same vehicles.

    Kinect for Xbox

    Sprint will sponsor the launch of "Kinect Adventures" with a co-branded retail experience on Xbox LIVE and a sponsored contest in which players of the game have the chance to get their pictures featured on Xbox LIVE. 

    T-Mobile will have fixed product placement throughout Kinect Sports, including volleyball net signage, custom bowling balls and foam fingers held by the arena audience. T-Mobile is also sponsoring a  Kinect Sports contest.

  • Microsoft Looks to Xbox to Help Drive Windows Phone 7 Success

    Microsoft announced its first wave of games for Windows Phone 7. These will be available at launch or shortly after, the company said.

    Microsoft revealed the first 50 titles, some of which gamers will recognize, and others that are completely new. The company also said the games will be "closely linked" with Xbox Live.

    "We’re really approaching this as we would a console, so we have to deliver the breadth of games and the quality people expect from Xbox,” said Kevin Unangst, senior director of PC and mobile gaming. "To have this quantity and quality of games committed this far ahead of launch, with even more to come, is a statement of support that says Windows Phone 7 will be a big success."

    "Consumers clearly look to gaming as an expected experience on their mobile phone now, and we’re going to take that expectation and that delivery up to a different level," he said.

    Xbox Live users will be able to connect in different ways from their phones. They can update their avatar or keep track of their gamescore, for example. Several familiar Xbox titles will offer companion experiences on Windows Phone 7. Halo: Waypoint will be available on the phone, and there will be other games that offer variations on the console versions.

    Xbox Comes to Windows Phone 7

    The company believes getting gaming right is crucial to Windows Phone 7’s success. "Depending on how you measure it, games are one of the biggest application categories in the smartphone space," said Greg Sullivan, senior product manager with the Mobile Communications Marketing Group. "That’s one reason we’re so excited about the Game hub broadly and the Xbox LIVE integration in particular."

    The games could help drive holiday sales for Windows Phone 7, and that’s exactly what Microsoft hopes will happen. Games are one of the company’s strong suits, and the Xbox connection could give the platform a much-needed push in the smartphone market right out of the box – possibly the search market as well.

  • Microsoft Announces Kinect Pricing for November 4 Release

    Microsoft announced today that the Kinect for Xbox 360 will include Kinect Sensor and the video game "Kinect Adventures," and that it will retail for $149.99 when it launches November 4 in North America. The Kinect Sensor will work with all Xbox 360 consoles (of which 40 million have been sold, according to the company).

    The company also announced an all-in-one Xbox 360 Kinect Console Bundle for $299. This will include the new Xbox 360 4GB console, Kinect Sensor, and "Kinect Adventures." Additional games will be sold at $49 each.

    Microsoft's Kinect Bundle

    "Kinect truly is a revolutionary product," says Josh Hutto, director of product marketing for Xbox. "We’re bringing controller-free entertainment into the living room. With one purchase, families get Kinect and the most complete and affordable way to have fun."

    Kinect, announced last month at E3, features video and audio sensors that eliminate the need for a traditional controller, while the user uses body motions and voice commands to play games, watch movies, and interact with other Xbox LIVE subscribers.

    Microsoft began taking pre-orders for the Kinect (and the bundle) today.