Microsoft: Win 7's business sales weak, but uptick expected

Recession, protracted licensing negotiations cited as reasons enterprise adoption has not taken off

Microsoft Thursday said 60 million Windows 7 licenses have been sold in the past six months, but most of those have been from the consumer side and business uptake has been flat.

The news came as Microsoft reported record quarterly revenue of $19 billion and $6.6 billion in profits for the second quarter of fiscal 2010.

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On the company's quarterly earnings call, Peter Klein, Microsoft's new CFO, says the company posted $500 million in revenue from retail sales of shrink-wrapped Windows 7 software, but Klein did not give specific numbers for business sales. The shrink-wrap sales represent the fact that users are able to update existing machines with the new operating system, which shipped in October 2009.

Klein said there has been "way more business activity" around Windows 7 than in previous releases of Windows operating systems. But he again did not provide any specifics. He did say that users are not waiting for Service Pack 1, which Microsoft so far has refused to discuss.

During the call, Microsoft admitted that it has not seen a return of enterprise spending growth. But Klein says the expectation is that it will begin to pick up later this year and continue for the next two to three years.

In addition, the company said enterprise agreement renewals are taking longer to complete, but Klein said when they do get done, users are not dropping products "and in most cases we are actually adding products on the [enterprise agreements]."

Enterprise agreements provide Microsoft customers from corporations to governments with a comprehensive volume licensing program that covers all their Microsoft software. The enterprise agreements include Microsoft's Software Assurance maintenance program.

In addition, Microsoft said sales of SharePoint Server, Office Communications Server, and Dynamics continue to see double-digit growth.

Microsoft also reported that it eliminated 800 jobs during the quarter and paid out $59 million in severance.

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This story, "Microsoft: Win 7's business sales weak, but uptick expected" was originally published by Network World.