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Microsoft, the world’s largest software maker, has reported a fall in quarterly revenue for the first time in its 23-year history as a public company. The group, which makes most of its money selling the Windows operating system and business software such as Office, saw lower demand for software for consumers and businesses as they cut costs amid the recession. Falling demand for its software is largely a result of fewer shipments of PCs and services, which have fallen over the past six months. The group has also been hit as consumers increasingly opt for cheaper, more simple, net-book computers that can only perform basic tasks such as e-mail and web browsing and do not need Windows’ more expensive systems. Sales of more expensive office software have also come under pressure as businesses increasingly opt to pay for their software over the internet as they use it, rather than pay bigger initial licence fees. IBM said it plans to launch such services this year. Chris Liddell, chief finance officer, said he expected the company’s markets to continue to be weak for at least the next three months but that he was pleased with how the group had acted quickly to cut costs in order to protect profits. Microsoft announced 5,000 job cuts in January, which cost it about $290 million (£197 million) in severance charges. Overall, revenue for the three months to March 31 fell 6 per cent to $13.65 billion, down from $14.45 in the same period last year. Net profit in the quarter dropped 32 per cent to $2.97 billion, down from $4.38 billion, hit by redundancy costs and a $420 million writedown on the value of its investments. The group, which withdrew its profit forecasts in January due to the uncertain economy, gave no guidance on its profits for the rest of the year. Revenues in the company’s Windows division sank 16 per cent to $3.4 billion, while the division that makes Office saw sales drop a modest 5 per cent to $4.5 billion. “With our continued R&D investment and our broad suite of products and services, we remain in a great position to compete and gain market share,” said Kevin Turner, chief operating officer at Microsoft. During the quarter, Microsoft released the beta version of the Windows 7 operating system, which the company said would be released fully in the first half of 2010. Kim Caughey, senior analyst with Fort Pitt Capital Group in Pittsburgh, said: “There is stuff to be happy with: they are controlling costs and getting that under control. The bad thing is demand and consumer preference seems to have affected their top line. The last couple of days tech earnings have shown an increasing weakness in enterprise spending. And more of a shift towards netbooks than notebooks, that would ultimately impact Microsoft. “They have a nice product refresh cycle coming up which should allow them to maintain their market share.” Microsoft has struggled to compete with rivals such as Google and Yahoo! in its online advertising business and the company’s Online Services division posted another loss-making quarter with revenue down 16 per cent from the previous quarter.