Microsoft's net income fell 28 percent year on year for its 2007 second fiscal quarter as it spent funds in preparation for the consumer launch of Windows Vista.

Revenue was up 6 percent for the quarter ending 31 December 2006, with Microsoft reporting revenue of $12.54bn on net income of $2.63bn. However, net income and earnings per share dropped as Microsoft spent a considerable amount of money marketing Vista. The operating system was released to businesses at the end of November, while several launch events around the world will be held early next week, including an event at the British Library in the UK on Tuesday.

The drop in net income can also be attributed to slow demand for Windows XP and other products as consumers prepare for the release of Vista, analysts said.

However, there was good news from Microsoft’s Xbox division. The company said it shipped 10.4 million units of the Xbox 360 by the end of 2006, a number that beat company estimates.