Whats Microsofts game plan?

So yesterday Microsoft presented this great quarter report, showing sales and profits that widely surpassed Wall Streets expectations ( $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year). Congrats to Microsoft. If everything goes as planned, if early sales of the new Windows Vista operating system really are off to a solid start – then its time to raise the eye and look further down the way. What are the non-proteindrinkers at Microsoft planning for the future?

These past few weeks many analysts and bloggers have pronounced Microsoft dead – or at least on it’s way to the tomb. But the company again rises as a healthy player in the industry.

“Industry analysts have been concerned that Microsoft might deliver an unsettling surprise in the quarterly report if Vista sales had been sluggish or if spending was spiking as the company struggled to catch up to Google in Internet services,” Steve Lohr notes in New York Times, quoting an analyst calling the report a “sigh of relief”.

The discussion among bloggers on the topic is vivid. At Rough Type Nicholas Carr states “whether it’s (Microsoft) dead or just irrelevant, the company remains an extraordinarily healthy economic organism. At Scobleizer former Microsoft-profile Robert Scoble writes that he’s going to hold on to his stock for Monday, then decide what to do with it: “I’ve seen some previews of some cool stuff, and Microsofties are buzzing about stuff I haven’t yet seen, but will come out next week at Mix,” he notes and reminds himself not to write off Microsoft or to think they can’t have huge impacts on our industry.

Nicholas Carr provides some analysis, comparing Microsoft’s results with the protein-drinkers at Apple. Apple’s growth (21% over year-earlier levels in the last quarter) actually pales in comparison to Microsoft’s that increased it sales by 32%, he writes. However even Microsoft’s growth pales in comparison to Google’s, which posted a 66% rise in sales in the quarter. But Google is still a much smaller business…

Nevertheless Google should be on the mind of the thinkers at Microsoft. At Peter O’Kelly’s Reality Check O’Kelly notes that Microsoft is expected to spend an estimated $4 billion in 2007 on online services business. But Yahoo plans to spend $4.7 billion and Google $8 billion.

At this point Microsoft is a profit-engine. Now they need to decide on how to use their assets. How will they compete? Will they change the game or make a frontal attack on Google?

Owen Thomas at Business2.0 Beta blogged the earnings call. Here’s one of his observations:
3:04 p.m. Pacific: CFO Chris Liddell wraps up with “a few observations”: “We’re growing revenues, profits, and earnings per share … at an impressive rate for a company our size.” In other words, Microsoft’s got a serious case of Google envy. No wonder they’re playing the theme song from Titanic.

Our recipe for the Google envy? Find your own drink to serve at Microsoft. It might not be protein as at Google – how about iron-pumped lingonberry?

By John Furrier and Tina Magnergard Bjers