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Slow Vista sales hit MS revenues as netbooks gain ground

Slow Vista sales hit MS revenues as netbooks gain ground

But the company's server software group is up 15 percent on Hyper-V strength, says analyst

The server group, which released Windows Server 2008 almost a year ago, "has been on a roll, even in this tough economy," said MacDonald, who spelled out several reasons.

"The move to virtualization is a clear cost savings for companies," he said, noting that Microsoft gives away its Hyper-V virtualization software and sells its management tool "at a very aggressive price."

MacDonald pegged Hyper-V and the also-important widespread accolades for Windows Server 2008 as key drivers in Microsoft's impressive gains.

The near future doesn't look much brighter for Windows client, MacDonald said. "There's a glimmer of hope in the second half of the year," he argued. "If Windows 7 comes out in advance of the holiday season, consumers may once again get excited about buying a new computer.

"Consumers and businesses can't continue to run their old machines forever," he said.

Microsoft released a public beta of Windows 7 on January 10, a fact that company executives mentioned several times Thursday morning during the conference call with Wall Street analysts.

The company also announced that it would cut 5,000 jobs, with first 1,400 layoffs slated for Thursday.

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