Microsoft revenues hold up on back of maintenance income

Peter Dinham
Tuesday, 14 April 2009 09:13

Business IT - Technology

Microsoft’s sales of new software have taken a hefty hit from the economic downturn but the sheer size of the company’s existing share of the market, with its software installed on many millions of machines worldwide, has seen its revenues hold up well in a belt-tightening market.

The software giant managed to retain its revenue-leading position in TBR’s software business quarterly benchmark survey, posting double-digit growth in services thanks to strong maintenance revenue streams, with Microsoft customers looking to optimise their existing IT infrastructure rather than invest in new software.

TBR’s SBQ senior analyst Stuart Williams says the 4Q08 SQB Benchmark study found that Microsoft was able to leverage its scale, deep installed base in the Americas and strong maintenance revenue streams to deliver industry-leading performance. Williams also believes the company’s continued investment in expanding into the SMB and vertical markets will position it to “garner additional maintenance revenue in coming quarters.”

As you’d expect as the global financial crisis deepens, every business in the world is looking to save money and reduce its costs, including spending on technology.  They are continuing to make do with what they’ve got, as TBR found out in its software survey.

According to Williams, customers continued to seek software solutions that help lower costs and increase flexibility and, not surprisingly at a time of customer belt tightening, the top-five revenue growth leaders in the survey, all specialise in selling emerging software technologies, including cloud computing and virtualization.
 
Salesforce.com took the top position for growth with TBR finding that its low-cost SaaS models appealed to customers’ price consciousness during the quarter.

“The company is increasingly targeting large enterprises, a strategy shift that resulted in a number of management changes among Salesforce.com’s top ranks,” according to Williams.
CONTINUED page 2