There are a number of issues that will concern Microsoft's senior team: delays to the long-awaited Office 2007 and Windows Vista have been confirmed; it has been unable to put anti-trust litigation behind it; and the rise of search giant Google threatens to erode its power over the desktop.

Yet, in spite of this, Microsoft remains formidable. For the three months ending 31 March revenues were up 13% to $10.9 billion and profits up 16% to $2.8 billion. According to Microsoft executives, revenue is expected to be in the range of $11.5 billion to $11.7 billion for its fourth quarter. And even though future forecasts are difficult to predict, Microsoft might well trounce the doom mongers as Ray Ozzie, the creator of Lotus Notes and now Microsoft CTO, looks to reinvigorate Microsoft’s knowledge worket toolset.

But there are indications that, far from being idle Microsoft-bashing, questions being raised about the company have some validity. One reason is the modest growth seen in its Client (Windows) and Information Worker (Office) units, which have traditionally been the bedrock of Microsoft’s revenue growth. Revenue for the three months in its Client division grew by 7.5% to $3.2 billion, while its Information Worker division saw a modest 5% increase to $2.9 billion.

However, Microsoft is fast finding traction in the growing business intelligence (BI) market. Sales of its newly released SQL Server 2005 database platform - which provides BI capabilities through data integration services, analytical and reporting functions, for example - were up by over 30% this quarter, boosting revenue by 15.7 % to $2.845 billion in its server division.

BI blues

But Microsoft will not be given an easy ride by the challenging BI market. The scale of the competition can be seen at Canadian BI vendor Cognos, where revenues dropped by 1% to $253.1 million for its quarter ending 28 February 2006; profits fell 19% to $44 million.

Cognos struggled in both Europe and Asia, where revenues were down 7% and 14% respectively, contrasting sharply with the Asia-Pacific growth rate of between 30% and 40% during the first half of the fiscal year. This drop was partially offset by growth in the American markets where sales rose 5% against the previous quarter.

The downturn was attributed to poor execution and forecasting against large sales opportunities, as well as the transition to the new Cognos 8 platform. However, Cognos 8 licence revenue still contributed $55.5 million in the fourth quarter, helping push total quarter revenue up 56% from the previous quarter, to $117.9 million.

Meanwhile, California-based data integration software vendor Informatica reported solid results for its first quarter of the 2006 fiscal year. Revenue grew 25% to $73.1 million. This was boosted both through organic growth and the recent acquisition of Irish data quality vendor Similarity Systems.

Sohaib Abbasi, chairman and CEO of Informatica, pointed to a 31% growth in licence revenue, as a clear indicator of potential market growth, as customers look to consolidate their data centre operations - a trend that will continue if merger and acquisition activity remains strong.

Similarly, BI vendor Microstrategy - which describes its core reporting software as ‘ROLAP’ or Relational Online Analytical Processing - reported a 16% rise in revenues for its first quarter ending 31 March, but its profits remained virtually flat at $15 million. MicroStrategy is using a lower pricing strategy than that of its rivals, some of whom are opting for web-based delivery and the software as a service model to attract new customers.

Another BI stalwart struggling in the competitive environment is NCR where disappointing sales of its Teradata data warehouses, ATMs, retail systems and self-service solutions contributed to a 4% revenue drop to $1.28 billion for its first quarter ending 31 March. In particular, revenue was affected by falling sales and negative foreign currency fluctuations from its Teradata data warehousing division, where revenue dropped 7% from the previous year’s quarter, to $346 million.

The revenue slide was mitigated, in part, thanks to improved operational efficiencies, boosting profits up by 36% to $41 million. Bill Nuti, president and CEO of NCR, said that it will continue its cost efficiency drive, aiming to save between $3 million and $4 million per financial quarter.

Click here to download a full list of key suppliers' financial results in April/May 2006.

Further reading

More on business intelligence:

• Business Objects hangs on to the hunt - Company analysis, May 2006
• Cognos raises its standard - Company analysis, October 2005
• More on articles on business intelligence can be found in the BI briefing room

More on Microsoft:

• Vista delayed as Microsoft reorganises - Company analysis, April 2006
• Microsoft talks Biz - Company analysis, April 2006
• Google throws Microsoft the gauntlet - M&A report, May 2006
• Microsoft's five-year bet on SQL Server - analysis, October 2005