With strong earnings and Windows 7, is Microsoft back?

The successful launch of Windows 7 and strong earnings is providing Microsoft with momentum.

Joshua Lott/Reuters
Alicia Cochran (center) helps a customer with the new Windows 7 program during the grand opening of Microsoft's first retail store in Scottsdale, Ariz., Oct, 22. The company's shares jumped Oct. 23 after it announced better-than-expected earnings.

Microsoft is back on track.

After a few years of less-than-stellar products and awful marketing, the company that once leap-frogged the competition is getting its groove back as the world's premier softwaremaker.

The question is: Does that matter in an Internet age?

First the good news. Microsoft announced quarterly earnings of 40 cents a share on sales of $12.9 billion, results that topped analysts' expectations and sent its stock soaring on Wall Street.

That came a day after the software giant began selling its highly anticipated upgrade, Windows 7, to positive reviews after its previous operating system, Vista, was widely panned.

It also launched its new Internet search engine this year and, this week, announced a major deal with it. The company also opened its first bricks-and-mortar store in its history and even a Paris café. Even its ad campaign is hitting all cylinders, making PCs cool again after getting clobbered for years by ad-jabs from rival Apple.

So what's not to like? Just this: Microsoft is back on track while its competition, Google, is taking wing.

Google's biggest challenge these days seems to be convincing the world it's not too big or domineering. (It has representatives visiting media outlets, including this one, to make its case.) Meanwhile, it's distributing Web-based software, cutting-edge applications, and a smart-phone operating system. And it's all free.

Compare that with the $120 to $220 most users will have to shell out to upgrade to some flavor of Windows 7 (though some users will get it for free).

Although Microsoft earnings were up last quarter, its sales were down 14 percent from a year earlier. It's the third straight quarter of declines and the first year ever that the Redmond, Wash., company has ever reported a year-over-year drop in sales. In January, it announced its first mass layoffs in its history.

These moves will help Microsoft in the months ahead. Rising sales of new PCs will drive up software sales. Current users will snap up Windows 7 upgrades.

The company is picking up speed. But it's not airborne. Not yet.
For some "happy words" on Windows 7, see the ad below. Or you could boost your altitude by following us on Twitter.

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