Microsoft's answer to Linux
In reporting its second-quarter financial results Thursday, Microsoft said revenue at its Server and Tools division, which caters to business customers, grew 18 percent year over year. Licenses sales of Windows server, which competes head-to-head with open-source software Linux and other server operating systems, grew 17 percent year over year.
Despite the threat posed by open-source products, Microsoft server software sales have been growing at double-digit rates for several quarters. Meanwhile, revenue from its current cash cows--its Windows desktop and Office products--have been flat or growing in the single digits, analysts noted.
Owing to the release of the "Halo 2" video game, Microsoft's Home and Entertainment division was also a strong performer in the second quarter. But server software offers the best prospect to recapture the rapid growth and fat profits Microsoft saw from Office and Windows in the past decade, said Greg DeMichillie, an analyst at researcher Directions on Microsoft.
