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Programming Windows: Transitions (Premium)

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Microsoft’s revenues had long been dominated by Windows and products that required Windows, like Office. But by 2007, Office had become Microsoft’s biggest business and Windows Server had emerged as a third core business. And so it is perhaps not coincidental that the software giant moved to shore up the Windows client by splitting Windows Vista to include more premium product versions, as had been done before successfully with Office. The results were immediate: in the quarter ending March 31, 2007, over 70 percent of initial Vista consumer sales were of premium versions, and premium Vista versions contributed 1 percentage point of growth to sales from PC makers.

The numbers were interesting. Windows client revenues surged an incredible 67 percent to $5.3 billion in the quarter, it reported, and Windows accounted for about 37 percent of Microsoft’s total revenues of $14.4 billion. But it had deferred at least two quarters of Vista-related technology guarantees: Windows client had really delivered just $4 billion in revenues in the quarter, or about 28 percent of Microsoft’s revenues. And the deferrals were over, so future quarters would deliver a more accurate telling of Vista’s success.

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