Microsoft reported a fall in net income for the firm's second quarter financial results ending 31st of December.
With revenue slightly up to $19.95 billion, the software giant reported a profit of $6.63 billion compared to $6.66 billion the previous year. The profit was a little higher than analysts expected amid continued concern of a weakness in computer hardware sales.
Microsoft's results were improved by strong demand for firm's Office 2010 applications which the company said has so far sold 50 per cent more than the previous version had within the same sales period.
While Microsoft trumpeted the performance of Windows 7 sales, surpassing 300 million licenses, profits of the firm's Windows business unit fell to $3.3 billion, down from $5.4 billion.
Microsoft CFO Peter Klein admitted to analysts on a conference call that tablet computers with rival operating systems had lead to "a bit of a drag" on the consumer Windows 7 business.
Microsoft continued to channel funds into the Online business, losing $563 million in the quarter, despite revenue increasing 19 per cent.
While the firm's Windows unit has suffered from tablet mania, elsewhere Microsoft's Entertainment and Devices business unit experienced surging revenue, up 55 per cent.
The boost was largely due to the astonishing success of the firm's Xbox 360 Kinect motion-sensor peripheral which has so far sold 8 million units.