Microsoft has delivered an excellent set of results, showing growth in pretty much all areas.

It seems to me that you can spin this in a couple of ways. First, you could argue that Microsoft is alive and well and still in the race. Certainly, with figures like these you can hardly suggest that it is out of the race.

Second, you could argue that the figures demonstrate how monopolies can continue to make good profits even when their products disappoint, especially in a buoyant market like computing.

The truth? Somewhere in between. It doesn’t matter how good the financials are: the disappointment with Vista is real. Personally I have Vista working fairly well, though annoyingly slowly at times, but I notice plenty of people advising one another to stick with XP, for performance and compatibility. Maybe the long-awaited SP1 will fix it, but some are now resigned to waiting for Windows 7 (you know, odd-number release theory) for a really good upgrade. Vista’s problems have created an opportunity for Apple and even Linux to grab some market share.

Other shadows hanging over Microsoft that come to mind:

• Lack of clarity over Internet strategy
• Continuing security problems centered on Windows (for whatever reason)
• Losing the search wars
• Governments mandating ODF
• Apple’s increasing market share, especially among thought leaders
• Bureaucracy and litigation
• PR and image problems

On the plus side I’d mention the strength of the .NET platform and languages; Silverlight’s promise; and the fact that most people still want to use Microsoft Office rather than Open Office (in my experience).

I am absolutely not a financial analyst; but I observe that having a good quarter does not fix what strike me as deep-rooted problems. At the same time it is a reminder of Microsoft’s huge resources and entrenched position; that’s not going to go away quickly either.

TechEd Europe the week after next; no doubt some more Microsoft reflections then.