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We had a strong (okay, really strong) hunch that the iPad was a contributing factor in Microsoft’s waning Windows revenue in Q2 , but there’s nothing like a little confirmation from Redmond. During the earnings call, Microsoft CFO Peter Klein was asked if tablets were cannibalizing PCs, to which he responded: I think that as Bill [Koefoed] talked a little bit in his comments about netbooks and how netbooks were, they hit their peak last year in Q2, and I think what we’ve seen is over the course of this year in the consumer space, some of that volume being replaced with newer devices like ultra-portables and tablets. And largely, these are second devices, not primary devices. And that’s caused a little bit of a drag on the consumer side. That seems like an admission that people aren’t buying Windows 7 tablets , but either way, it’s now crystal clear that Microsoft suffered during the back-to-school and holiday season because consumers who may have previously picked up a Windows 7 Starter netbook went for a glossy new iPad (or maybe a Galaxy Tab in the later part of the quarter) or a more powerful ULV ultraportable. Obviously, the shift to tablets is to be expected, but the latter bit about ultraportables is quite telling as well — it seems to further confirm that people are seeking more power than Intel’s Atom, although we don’t really see how increased ultraportable sales would be a “drag on the consumer side” of Microsoft’s business considering ultraportables run Windows 7 Home Premium or Professional. Sadly, Klein made no mention of Microsoft’s future tablet plans, but stated that netbooks were past their prime. We’re pretty sure that ” next version of Windows ” or whatever tablet OS Microsoft is planning couldn’t come soon enough for everyone. Or hey, could we suggest reviving the Courier ? Microsoft: tablets affected Q4 earnings, netbooks past their peak originally appeared on Engadget on Thu, 27 Jan 2011 23:02:00 EDT. Please see our terms for use of feeds . Permalink