Right after I tell you not to get too excited about SAP's fiscal-quarter-four and full year 2009 results relative to outlook for the overall enterprise software market, Microsoft (MSFT) blows the lid off its guidance.
So are all bets off now? Is it time to go full bore back into these enterprise software market providers plus other enterprise-software market leaders Oracle (ORCL) and IBM?
I think not, at least not because of the enterprise software market angle. As described at the link above, SAP's results were consistent with its historical seasonality. Similarly Microsoft's higher than guidance results appear to be almost all Windows 7 announcement timing and Windows 7 Technology Guarantee Program/deferred-revenue driven. To be specific, Microsoft says in its 10-Q:
"The OEM revenue increase was primarily driven by PC market growth, higher Windows attach rates across all regions, channels, and types of PCs and the restoration of normal OEM inventory levels, offset in part by PC market changes, including stronger growth of consumer PCs versus business PCs and of emerging markets versus developed markets. (underline added by Byron)"
Windows 7 retail sales did well. Some of that may have been driven by enterprises but I would not bet on it.
Microsoft often gets lumped in with SAP and Oracle by critics of the enteprise-software busiess model that depends on maintenance and other services revenue streams. The Server and Tools Division results illustrate that Microsoft should not be looked at in that way. The Microsoft Business Division revenue was down 7% (representing both consumer and business customers) and even some of this division's growth revenue substreams were based on deferred accounting.
As with the SAP announcement, beating expectations is still better than missing targets. But there is extenuating circumstances in both cases that still argue that IT budgets haven't yet freed up.
-- Dennis Byron