• by Gavin O'Malley , Staff Writer @mp_gavin, April 20, 2012

In an otherwise strong third quarter for Microsoft, the software giant suffered in the key area of Entertainment & Devices -- home of the Xbox and Windows Phone.

“The division reported revenue of $1.62 billion, down 16% from a year ago,” reports VentureBeat, citing Microsoft Q3 earnings report. Microsoft blamed “a soft gaming console market” for the decline. Indeed, Xbox 360 sales were down 48%, while the company remained the leader in the video game console market with a 42% share.

That said, Microsoft reported quarterly revenue of $17.41 billion for the quarter, which represented a 6% increase year-over-year, eWeek notes. “However, net income slipped 2.4%  for the quarter.”

Writes Reuters: “The results buoyed optimism around the world's largest software maker, which is lining up a new tablet-friendly version of Windows for later this year and is looking to make a dent into Apple Inc and Google Inc's domination of the mobile market this holiday shopping season.”

Also of note, “though the Online Services division (which includes Bing and MSN) continues to lose money, it posted revenue of $707 million, a 6 percent increase,” according to The Seattle Times. “And it cut its losses by $300 million, which [Lisa Nelson, Microsoft's director of investor relations] said resulted from increased monetization and cost cutting.”

Still, “The Bing search engine, which also powers Yahoo's search, continues to be a big lossmaker for the company,” The Guardian points out. Overall, “These numbers are … impressive, and Microsoft is encouraged by their strength,” writes Forbes. "A good quarter for Microsoft,” agreed parislemon blogger MG Siegler.