Microsoft announced record second-quarter revenues of $19.95 billion overnight. With Apple’s record profits and Google’s solid growth announced last week, it seems the Big Three are all in solid positions to compete for market share.

Microsoft’s reserve of cash, cash equivalents, and short-term investments sits at $41.2 billion, compared with Apple’s $59.7 billion and Google’s $35 billion.

But some are more solid than others in this three-way contest to dominate the new world with their integrated stacks of devices, operating systems and cloud-based services.

A key factor in driving Microsoft’s record earnings per share of $0.77 was the pre-Christmas success of its new Kinect device, which allows no-touch interaction with the Xbox 360 game console using gestures and spoken commands. Eight million were sold in just 60 days, driving up sales of Xbox 360 consoles themselves, Xbox Live subscriptions and games.

Without a doubt Kinect is cool. Once it works with PCs, expected in Windows 8 some time in 2012 or later, it’ll allow us to interact with computers in complete new ways. Geeks have already got Kinect working with Windows unofficially — and with Apple’s OS X and the open-source Linux platform — and used it to control a  robot helicopter and window shades with the wave of a hand.

There’s even the Kinect T-tty Tracker that, um, well… welcome to our future.

Microsoft also talked up its business division — essentially Microsoft Office — with profits up 35% year-on-year. Office 2010 is selling significantly faster than Office 2007 did at the same point in its lifecycle.

“Business demand for our productivity and infrastructure products and cloud solutions is strong. Office had a huge quarter, exceeding everyone’s expectations, and our roadmap for cloud productivity with Office 365 makes products like SharePoint, Exchange, Lync and Dynamics CRM even more attractive to our customers,” said Kevin Turner, Microsoft’s chief operating officer.

Windows 7 is hyped as “the fastest-growing operating system in history”, and Microsoft claims it’s now running on 20% of internet-connected computers worldwide. Yet what Microsoft doesn’t highlight is that the Windows & Windows Live Division saw a 40% drop in operating income year-on-year. Nor did it mention that so far Windows Phone 7 hasn’t sold as well as hoped.

Microsoft also doesn’t highlight that its online services division continues to p-ss away the cash. December was the 20th consecutive quarter of losses, and saw Microsoft wave goodbye to another $543 million. And that’s far from being their worst quarter.

“This gives Microsoft [online] a trailing-four-quarter loss of $2.5 billion. That’s simply astounding,” writes Business Insider, who’ve been charting the losses. “We’ve asked it before, and we’ll ask it again: Has any company lost as much money online as Microsoft?”

Over the past five years, Microsoft’s share price hasn’t really done any better than the NASDAQ composite and, as the Wall Street Journal points out, “the software giant offered little indication as to how it will address the fast-growing smartphone and tablet computer segments where it has little presence”.

That’s part of Microsoft’s challenge. The cool kids are playing with Apple’s iPhone and iPad or mobile devices running Google’s Android. They’re hooking back into supposedly more open cloud platforms like those provided by Amazon and Salesforce.com. Could Microsoft be too late to the party?

Corporate IT managers are slowly realising they don’t really need the full-blown Microsoft Office for everyone, that Google Docs is perhaps enough. The Microsoft Office cash cow is under threat.

And Microsoft has that continuing image problem, deserved or not. A little boring. Google’s Gmail and Microsoft’s Hotmail are essentially the same thing, but Gmail has the street cred.

There are smart people at Microsoft, and good technology. But what about the vision thing? Apple and Google have their visionaries, Steve Jobs and the Page-Brin duo respectively. Microsoft has Steve Ballmer who, for all his on-stage antics, just comes across as a sweaty old fat bloke. And he’s younger than Jobs.

Despite all of that, Microsoft’s earnings were better than expected, and shares rose a cent in after-hours trading.

*Disclosure: Stilgherrian will shortly attend the RSA Conference on information security in San Francisco as a guest of Microsoft.