Last November I talked about the way Microsoft stacks the deck in its financial reports -- all perfectly legal, of course -- to obfuscate sales of its new Windows systems. We saw it happen with Vista and Windows 7, and we're seeing it again with Windows 8. As I said back then: "We're likely to know less about Windows 8 sales in January than we do now."
That's exactly what's happened.
Microsoft released its fiscal Q2 results last night, and the sales part of the equation -- $21.5 billion for the whole company, up 3 percent year-over-year -- was exactly what everyone wanted to see: slow, steady growth. Profits weren't quite as reassuring, with operating income down 3 percent from last year, but it's hard to argue with a $7.8 billion profit.
Once again, we saw deft application of the deferred revenue technique. Microsoft can book income from a sale now or later, depending on its estimates of how many customers have upgraded, or will upgrade, to Windows 8. The earnings report gives both numbers, with and without deferrals.
If you ignore the revenue deferrals, the Windows division had just under $5.9 billion in income. Include the deferrals and the adjusted figure is just under $5.3 billion, which is $518 million -- or 11 percent -- higher than a year ago. That's quite an accomplishment, given the fact that PC sales in the fourth quarter of 2012 were down 6.4 percent, year over year, according to IDC.
The one hard and fast accounting rule is that Microsoft has to unwind all of its Windows 8 revenue deferrals by the end of February, when its upgrade offers expire. There's an extra $1.1 billion in deferred income floating around that will show up in the Windows division's fiscal Q3 report, unless it comes up with a different accounting technique. So look for a similarly obfuscating but apparently positive report on Windows division sales next quarter.
The best analysis of the numbers I've seen comes from Matt Rosoff at CITEworld. Rosoff estimates that at least $300 million of that $518 million difference came from sales of Surface RT. Microsoft claims its volume license sales were up more than 10 percent from last year. It also says that OEM revenue "outperformed the overall x86 PC market." Considering the overall PC market was down 6.4 percent, I'd call that damning with extremely faint praise.
I guess we could try to read something into the fact that Microsoft repeated its statement from three weeks ago that it's sold 60 million copies of Windows 8. But the original statement was so squishy it wasn't even credible. If Windows 8 were tracking at 18 to 20 million copies per month, as Windows 7 did for most of its later lifetime, I'm sure we would've heard something about 70 million or 75 million in Win8 sales to date. But we haven't. We also haven't heard diddly about Windows RT sales.
In the end, what does Microsoft's quarterly report tell us about Windows 8?
Absolutely nothing -- which, I suspect, is exactly what the brass at Microsoft want.
This story, "Windows earnings report a work of smoke and mirrors," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.