It is no secret that the software industry is extremely competitive; however, most expected that Microsoft’s 2012 fiscal year would have turned out a little better than it did. When the reports came in, Microsoft reported $21.5 billion in the second fiscal quarter, which was an increase of nearly 3 percent in comparison to the same time frame last year. With that being said, their overall profits were $6.38 billion, which was a decrease of approximately 4 percent in comparison to this time last year. Shares were also dropped by 76 cents per share as a result of the declining profits, which was bad news for investors.
Many say that a lot of these figures have to do with the performance of Windows 8, the company’s latest operating system, which was released during the middle to latter half of last year. When people heard a new system was being released, which would have a modernized feel in comparison to Windows 7, many of them were ecstatic and could not wait to get their hands on a copy. However, when the software actually hit the shelves, it did not sell nearly as well as many experts had projected.
Originally, Microsoft had made it sound like it was the hottest selling operating system they ever created, but they made some updates after further analyses were conducted. At this point, it was announced that many of the sales were unaccounted for or not described in great detail. Some of the sales were likely connected to buyers, such as corporations, who essentially said they would be upgrading to the newest operating system as soon as their current operating system would become outdated.
Of course, it was a fairly rough year for all electronic sales. Opposed to getting in the holiday spirit before heading out to do holiday shopping, many were worried about what might happen to the economy with the fiscal cliff discussions seemingly stalling out. And, the worst part is that a major chunk of all retail sales are during the fourth quarter- the holiday shopping season.
In addition to the lower-than-expected sales with Windows 8, Microsoft’s XBOX 360 sales and the sales of their Surface were also down. The video game console sales were down by 11 percent in comparison to last year. Exact sales figures were not released on the surface; however, CFO, Peter Klein, blamed the problem on the device not being offered by as many retailers as the iPad.