Microsoft today posted its earnings results for the third quarter of financial year 2011. It was a strong quarter, with revenue of $16.43 billion, up 13 percent year-on-year; operating income of $5.71 billion, up 10 percent year on year; and net income of $5.2 billion, up 31 percent over the same period last year. Earnings per share were 61¢, an increase of 36 percent.

The big success story of the quarter was Entertainment and Devices Division, the group that includes Xbox 360, Xbox Live, and Windows Phone. Continued voracious demand for the Kinect controller saw that division boost its revenue by 60 percent year on year. Though the division was keen to boast of selling 2.4 million Kinects during the period, it was silent on the matter of Windows Phone sales.

Microsoft Business Division was another strong performer, seeing revenue growth of 21 percent year-over-year driven by Office 2010, the fastest-selling version of Office of all time, and its SharePoint, Exchange, Lync, and Dynamics CRM products.

Server and Tools had a successful quarter too, with revenue up 11 percent, on the back of significant business adoption of Windows Server 2008 R2, SQL Server 2008 R2, and Systems Center. Online Services increased revenue by 14 percent, and increased losses by 2 percent.

In spite of Windows 7's continued strong sales, the Windows and Windows Live division's revenue dropped by 4 percent, with the company citing prevailing PC trends as the reason for this decrease.

The company's guidance for next quarter is that Windows and Windows Live and Online Services will increase revenue in-line with growth in the PC and advertising markets, respectively, with Business Division, Server and Tools, and Entertainment and Devices expected to increase revenue by mid-to-high single-digit, low double-digit, and 25 percent, respectively.

Overall, it was a strong quarter for the company, beating analyst estimates for both revenue (estimated at $16.2 billion), and earnings per share (estimated at 56¢). Strong results, but not as strong as Apple, which posted a net income of $5.99 billion for the quarter.

These results mean that Apple has at last bested Microsoft not merely in terms of market capitalization, but also in terms of profitability—a result unimaginable a decade ago. This quarter's figures are testament both to Apple's substantial success in conquering new markets—media players, smartphones, and tablets—and, in parallel, Microsoft's consistent inability to match its rival in those same markets.