Microsoft has announced revenue of $9.62 billion for the quarter ended March 31, 2005, a 5% increase over the results in the same period of the prior year. The results were driven by better-than-expected demand for personal computers as well as strong sales of its server software and Xbox consoles.

Microsoft is set to unveil the next generation Xbox console on May 12 on MTV, and the company detailed new features this week of a major upgrade to Windows, code-named Longhorn, at the WinHEC 2005 where the company also revealed that the Xbox 360 controller will be compatible with the next-generation Windows.

"The outlook for fiscal 2006 is better than we expected,'' said Brendan Barnicle, an analyst at Pacific Crest Securities.