Microsoft also made a great deal of hay out of the 60 percent rise in Xbox and Kinect sales -- a remarkably good development and testament to the popularity of the Kinect. (I remain convinced that Kinect, and similar input devices from other companies, will revolutionize the much-beleaguered "user experience.") But the analyses tend to gloss over one important fact: Xbox/Kinect profits account for less than 5 percent of Microsoft's total profits. It's not quite a rounding error, but not a whole lot more.
The Windows client numbers give me pause. I talked about the discrepancy between Microsoft's Windows 7 licensing figures and Gartner's PC sales figures last week. In that article I came to the conclusion that roughly 35 to 40 percent of all new PCs ship without Windows 7. In the earnings report, Windows sales were down 4.4 percent compared to last year, while total PC sales are estimated (by Gartner) to be down about 1.1 percent. That's a considerable gap -- one that makes me wonder if more than 40 percent of all new PCs ship without Windows 7. Staggering.
This isn't an iPad-induced gap, by the way. It's a discrepancy between a small decline in PC sales and a much larger decline in Windows 7 revenue. Of course, Microsoft doesn't release enough information to come up with definitive statistics. But a gap like that has to make you wonder.
The number that really grabs me: Bing is absolutely gushing red ink. At the current rate, Bing will lose $3 billion this year. Microsoft's buying market share -- trying to build up its search numbers -- and paying a stunning price. The deal with Yahoo isn't generating the kind of return everyone was expecting. Bing's inching up in U.S. market share, but going absolutely nowhere internationally. Henry Blodget at Business Insider rubs the numbers together and comes to the conclusion that Microsoft is paying $5.5 billion this year to generate $3 billion in online revenue.
All is not doom and gloom. The Server and Tools division is going strong, with $4.1 billion in quarterly revenue -- almost as much as Windows client. Microsoft hired a net 684 new employees in the quarter, for a total of 89,403. There are new products coming down the pike, with Office 365 out now in beta/preview form, Windows 8 and Windows 8 server milestones leaking like concurrent sieves -- still widely anticipated around fall of next year -- and Office 15 sitting somewhere in the wings for anticipated delivery in 2013.
Microsoft's clearly generating cash faster than it can spend it, but the downturn in Windows 7 sales doesn't bode well. We may be seeing another sign of an inflection point on the way to the post-PC era.
This story, "Why Microsoft was punished for a very profitable quarter," 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.