Microsoft has posted strong results again in its most recent quarter, despite the turmoil in the financial markets. That's not a surprise. The software giant still has a vast monopoly on everyday computing through Windows, Exchange and its Microsoft Office franchise - despite the cute Apple ads that try to make the boys in Redmond look like clods.
The big question is how the company will cope with the emerging shift toward "cloud computing," the concept that computing power, applications and data will exist on remote server farms and be delivered to desktops via the Internet.
Microsoft may provide some of the answers next week when it hosts a a conference for developers in Los Angeles. Microsoft CEO Steve Ballmer has already hinted that the company is working on a "Windows Cloud" operating system, which would mark a fundamental shift from the company's core business of proprietary software running on PCs and servers powered by Intel chips.
Microsoft, which is a master at managing Wall Street's expectations, delivered strong results for the quarter ending September, reporting a 9 percent increase in revenue to $15.1 billion and earnings per share of 48 cents, in line with expectations.
However, the company cut its forecast for the full fiscal year ending next June by around $2 billion to a range of $64.9 billion to $66.4 billion. This reflected an acknowledgment that an economic upturn in the first half of 2009 is highly unlikely.
There will be a full agenda at Microsoft's Professional Developers Conference in Los Angeles next week. In addition to Windows 7, the next version of its dominant operating system, Microsoft will address software-as-a service (Saas) and, finally, "cloud computing," which has been the industry buzzword in the last few months.
It will be the first time the company lays out its view of cloud computing and how it will integrate its massive base of applications and users with a trend that seems unavoidable. How well Microsoft does that and how completely it convinces developers of its commitment will be studied for signs that the company is to truly ready cope with a fundamental shift in the industry.