Analysts worry about Microsoft

A year ago Microsoft reported blistering sales of its new Windows 7 operating system and trumpeted optimism about the recovery in tech spending.

However the Imperium is not doing so well this year and the world’s largest software company is set to report lower profits.

Partly to blame is a drop in PC sales and many think that if CEO Steve “there’s a kind of hush” Ballmer had seen the growth in mobile, the company would have ridden the storm.

Reuters quoted Tim Bajarin, president of tech research firm Creative Strategies, as being fairly typical of the mutterings against the Imperium’s number One.

Bajarin said that while Microsoft is still a juggernaut in the PC business, and Windows-based machines are still selling over 300 million a year, its problem is that it missed the smartphone revolution. While they were the first to really push the tablet, Apple basically redesigned it and left Microsoft in the dust, he said.

Redmond’s own push into mobile has not done very well. Its Windows Phone 7 copied some of the worst aspects of Apple’s walled garden and has proven too restrictive to compete with Android. It seems to have worked out that making a version of Windows for ARM chips is better than relying on the Wintel alliance. Intel has also not done that well out of the mobile boom. But all this means that there won’t be a Windows-based challenger to Apple Inc’s iPad for at least two years.

PC sales, the surest guide to Microsoft’s overall health, rose only 3.1 percent in the last three months of last year. Analysts had expected PC sales to rise by 19.2 per cent, however the increase was only by 13.8 percent.

The only thing that has been saving Microsoft from a poor quarter is that business customers are buying new computers. These guys make up the majority of Redmond’s customers and they want Windows 7. Consumers are looking for something cheaper at the moment.

The other bright star for Microsoft has been its Xbox sales which were boosted by the release of its Kinect motion controller.

However when these figures come out, we can expect a wave of analysts and pundits telling Ballmer to either do something about them or walk away.