Microsoft posts record yearly revenues as Xbox surges but Windows falters

Microsoft has posted record annual revenues of $69.94bn, an increase of 12 per cent year on year, despite sales of its dominant Windows software continuing to decline. 

The company also had its best ever fourth quarter, generating revenue of $17.4bn, an increase of four per cent year on year. All divisions bar one saw revenue increases, although growth was still well short of Apple's record financials.

The Windows and Windows Live division saw revenue decline by one per cent in the fourth quarter and two per cent year on year, even though Microsoft has sold 400 million Windows 7 licences to date. 

Microsoft's Business division remained steady, with revenue for the fourth quarter growing by seven per cent, and the company confirmed that Office 2010 is the fastest-selling version of the suite with over 100 million licences sold so far.

Meanwhile, the Server and Tools business saw growth of 12 per cent in the quarter after increased adoption of Windows Server, System Center and SQL Server.

The Online Services division grew by 17 per cent over the period, the US edition of Bing ending the quarter with a 14.4 per cent market share.

However, it was the Entertainment and Devices division that outshone the traditional core areas of Microsoft's business.

The Xbox 360 is one of the strongest selling consumer products on the market, and was the top selling console in the US last year.

The strong sales, together with the Kinect motion sensor input accessory, saw revenue increase by an unmatched 30 per cent during the past quarter, and 45 per cent year on year.