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In the battle of the titans – a surprise winner has emerged with a $6.63bn profits in prize money.Microsoft has just announced the slight dip in net income for the Q4 2010, down from $6.63bn year-on-year, although results were better than expected. 

A surprise jump in its OS and Windows Live division net income for the October-December period delivered revenues of $5.04bn – almost half a billion above analyst predictions.  

It’s Office and server business division also earned more than originally thought, on the back on strong Office 2010 uptake. Over 300 million Windows 7 licenses were sold since its release in October last year, Microsoft said. 

However, several other key areas of the OS business headed by CEO Steve Ballmer, including Entertainment and Devices division fell short and the newly released Windows7 phone also failed to provide the boon many hoped for.  

The division which recorded earnings of $3.7 billion includes core products such as MS Kinects, which sold over 5 million in its first few weeks along with its XBox 360 all fared well with consumers this year with sales up, however, profits fell short of analysts’ expectations. 

The Kinect sold 8 million in total last year. 

Sales figures for Windows Phone7 were not released although it believed the large marketing offensive undertaken for the launch might have impacted on figures.  

 

Microsoft’s PC sector also fell short with the advent of the iPad and tablets eroding demand worldwide.   

However, despite this, the OS giant still has good reason to celebrate – it has succeeded in beating its biggest enemy Apple in the profit stakes- pipping Steve Jobs’ company figures by $0.63 billion – and retaining the crown as one of the most profitable tech companies in the world.         

Although Apple revenues, at over $26.74 bn, were higher than Microsoft’s $20bn for the quarter, the OS giant proved more profitable in the bottom line.    

And Steve Ballmer is aware of his firm’s core strengths, stating earlier this year at CES, “every kid grows up with Microsoft Office to do their homework, but the exciting part of their life is what they’re doing online, is what they’re doing with their friends. It’s gaming, it’s DVD.         

And Xbox is square in the middle of that. So I like our seat at the table, if you will.”      

For now, this is where their strengths lie, but the company will have to up the ante on its Windows Phone 7 and accelerate its tab OS and WebOS slate offering if it is to stay afloat.

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