Most comments on Microsoft’s quarterly results are understandably focused on the overall picture: a quarterly revenue decline for the first time ever.

Revenue decline can be forgiven during a recession, but it’s more interesting to look at the breakdown. I made a simple quarter-on-quarter table to look at the pattern:

Quarter ending Mar 31st 2009 vs quarter ending March 31st 2008, $millions

The weak Windows client figures are unsurprising. The poorly-received Windows Vista is out in the market, and the highly-praised Windows 7 is being prepared for release. When anyone asks me, I suggest that they should wait for Windows 7 before buying a new PC or laptop, if they are in a position to delay.

The Business division (Office) remains massively profitable, even though it too has declined a little. Office may be ludicrously expensive, but there’s little evidence of a significant shift to cheaper or free alternatives.

It’s also notable that the server and tools business continues to perform well. Again, I’m not surprised: Server 2008 strikes me as a solid product, and there’s not much wrong with products like SQL Server 2008 and Visual Studio.

Not much to say about entertainment and devices. Xbox is doing so-so; Windows Mobile is rather a mess.

The real shocker here is the online business. Revenue is down and losses have grown. It is no use just blaming the recession: this is a sector that is growing in importance. Should Microsoft back out and leave it to Google? That would be as if Kodak had refused to invest in digital photography. But something is badly wrong here.

That said, I’m guessing that the figures mostly represent the failure of the various Windows Live properties to attract advertising income; the small market share of Live Search must be an important factor. The newer cloud computing business model, where Microsoft sells subscriptions to its online platform and services, is largely still in beta – I’m thinking of things like Windows Azure and Live Mesh. Further, I’m not sure where Microsoft puts revenue from things like hosted Exchange or hosted Dynamics CRM, which straddle server and online. There is still time for the company to get this right.

I’m not convinced though that Microsoft yet has the will or the direction to make sense of its online business. Evidence: the way the company blows hot and cold about Live Mesh; the way SQL Server Data Services was scrapped and replaced by full online SQL Server at short notice; and the ugly and confusing web site devoted to Windows Azure.

When I looked at Virtual Earth recently I was impressed by its high quality and ease of development. It illustrates the point that within Microsoft there are teams which are creating excellent online services. Others are less strong; but what is really lacking is the ability to meld everything together into a compelling online platform.

That could change at any time; but we’ve been waiting a long while already.