Microsoft’s Fourth Quarter Earnings Report is out: Big spending for Online Services

The big news today is that Microsoft released their Fourth Quarter Earnings Report.  Well, that report brought some interesting news from the Online Services Group.  According to the report, the Online Services Group, which includes Windows Live, lost 732 million dollars this year, way up from the 74 million that they lost the previous year.  Now, what could they have spent 658 million extra dollars on this year.  Luckily for us, they let us in on that too.  The report sites, “increased data center costs in our Online Services Business,” as the reason for the extra losses.

Well, we do know that Microsoft has built an impressive data center in Quincy, Washington.  Let’s see, what could Microsoft be doing with that data center?  What could justify all of this money being spent on data centers for the Online Services Group?  For me, all signs point to Windows Live Core.  As you may recall from when we originally reported on Windows Live Core, Ray Ozzie, Chief Software Architect and the person in charge of Windows Live Core, was quoted in Fortune saying that “To deliver a Web-based product line, Microsoft must build a global network of server farms that will cost ‘staggering’ amounts of money.”  Although I would consider 658 million extra dollars a “staggering” amount, even for Microsoft, I have a feeling that they aren’t done yet.

Another source of extra spending in the OSG was an increased headcount.  They are hiring a lot of people and paying them good money.  This is pure speculation, but maybe the increased salaries are coming from Ozzie’s all-star team working on WL Core.

This is hard evidence, Windows Live isn’t going anywhere, any time soon, especially with a massive investment like this.  I’m personally excited to see what they do with it.

Official Press Release