Windows sales drop nearly a quarter

The company's Client group, home to various editions of the Windows client operating systems, saw revenues tumble 24 per cent and operating income drop by 26 percent to US$3.1 billion.

Microsoft attributed the fall to US$1.2 billion in previously deferred revenue recognised in last year's third quarter from its Express Upgrade to Windows Vista Technology Guarantee programme.

Meanwhile, the Microsoft Business Division, which sells Microsoft Office, saw a two percent decline in revenues to US$4.75 billion.

Microsoft's disappointing Windows sales fly in the face of positive overall trends in the PC market which, according to the company's own estimates, grew by eight to 10 percent.

Xbox sales offered the company some rare cause for optimism. The unit clocked up a third straight quarterly profit putting the company just one quarter short of posting its first annual profit for its games console business.

Healthy sales of Xbox 360, Halo 3, Xbox Live fees and Xbox accessories helped the division post profits of US$89 million for the three months ending in March.

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