Linked by Thom Holwerda on Mon 31st May 2010 15:50 UTC
Microsoft While Microsoft is indeed incredibly profitable, it's not going as well as it seems. The company is still riding high upon its Windows and Office offerings, but when it comes to new markets, Microsoft hasn't been as successful. Jean-Louis Gassee [a bug prevents me from using the correct spelling - fixed in the article body] provides some very interesting insights into the company's past ten years.
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Rome
by SReilly on Mon 31st May 2010 16:10 UTC
SReilly
Member since:
2006-12-28

MS reminds me very much of the Roman empire just before the decline. Using money to paper over the cracks, the people at the top either have very little idea of what is really going on or are perfectly happy to keep to the status quo and/or be yes people.

I think JLG has hit the nail on the head. If MS want to stop stagnating, they need to fire Ballmer as CEO. The failures just keep rolling in while he's at the helm. He's not a technologist and never has been so how can MS expect to anticipate coming tech trends with Ballmer driving? Sure, he could hire people to anticipate these trends but he'd actually have to start listening to them, something he seems to be incapable of.

Reply Score: 2

RE: Rome
by Thom_Holwerda on Mon 31st May 2010 16:14 UTC in reply to "Rome"
Thom_Holwerda Member since:
2005-06-29

I'd say Ballmer should do what he does best: sales. Let him be the one handling the big accounts, like the large OEMs and such.

Let someone new, fresh, and young lead the company. Sinofsky, for instance, has done some incredibly great things with Office and Windows 7.

Edited 2010-05-31 16:14 UTC

Reply Score: 3

RE[2]: Rome
by SReilly on Mon 31st May 2010 16:27 UTC in reply to "RE: Rome"
SReilly Member since:
2006-12-28

I agree. Ballmer, for all his failures as a CEO, has always been a great sales man. That was one of the reasons why I was so shocked when Gates chose him as his successor. He's a marketing and sales guy without a nerd bone in him, not good material to lead the world's most successful and powerful tech company.

As for Sinofsky, he certainly seems like a great choice. Office has gone from strength to strength under his leadership and the success of Windows 7 after the shambles that was Vista was like watching a Phoenix rise from the ashes. He definitely seems like a better fit and has the track record to back it up.

Reply Score: 2

RE[3]: Rome
by David on Mon 31st May 2010 18:52 UTC in reply to "RE[2]: Rome"
David Member since:
1997-10-01

If anyone is a fan of "The Office," there's an interesting parallel here. In the UK version, David Brent is more of an all-around idiot, but in the US version Michael Scott is revealed to have been an excellent salesman whose goofy demeanor actually helped him connect with customers. But by an accident of fate he came to be manager of the branch, a position for which he is utterly unsuited. Hilarity ensues.

Reply Score: 5

RE[2]: Rome
by google_ninja on Mon 31st May 2010 17:44 UTC in reply to "RE: Rome"
google_ninja Member since:
2006-02-05

hard to call someone who has worked at ms for about 15 years "new", and what hair he has left white as snow "young", but he is definitely the sort of fellow who "gets it".

Reply Score: 1

RE[2]: Rome
by segedunum on Tue 1st Jun 2010 20:22 UTC in reply to "RE: Rome"
segedunum Member since:
2005-07-06

I'd say Ballmer should do what he does best: sales. Let him be the one handling the big accounts, like the large OEMs and such.

Why? He can't even do that properly. He lost the HP account. For a previously big Microsoft OEM to turn their backs on Windows and buy Palm and use WebOS instead is a big moment in the history of Microsoft, even if it was for a tablet.

Reply Score: 2

RE: Rome
by westlake on Tue 1st Jun 2010 01:39 UTC in reply to "Rome"
westlake Member since:
2010-01-07

MS reminds me very much of the Roman empire just before the decline.

The western empire had a four hundred year run. The eastern empire a thousand years beyond that.

Apple has sold 5 million iPads.

According to Net Applications, that translates into 0.03% share of global web browsing. In the U.S., 0.12%. Windows' share is 91%.

The market for mobile Internet devices is still in its infancy.

It's a little early to be picking winners and losers.

Reply Score: 4

RE: Rome
by kaiwai on Tue 1st Jun 2010 07:10 UTC in reply to "Rome"
kaiwai Member since:
2005-07-06

MS reminds me very much of the Roman empire just before the decline. Using money to paper over the cracks, the people at the top either have very little idea of what is really going on or are perfectly happy to keep to the status quo and/or be yes people.

I think JLG has hit the nail on the head. If MS want to stop stagnating, they need to fire Ballmer as CEO. The failures just keep rolling in while he's at the helm. He's not a technologist and never has been so how can MS expect to anticipate coming tech trends with Ballmer driving? Sure, he could hire people to anticipate these trends but he'd actually have to start listening to them, something he seems to be incapable of.


In fairness though he delegates responsibility to those underneath him - to replace the CEO will not address the fundamental company culture. For example, Zune could have challenged iPod but they refuse to sell it overseas (why can't I buy it in New Zealand), they refuse to support both Mac and Windows users because they choose to use a proprietary protocol instead of MTP, then to make matters even worse there is no long term plan for it - it is a series of knee twitches once every several months with no long term plan.

Then there was XBox 360 where there was the high failure rates, lets not kid ourselves now - the issues till remain, all because they wanted to save a few dollars not to mention the money wasted fighting a war with Sony that was doomed to failure.

Then there are the online services; I don't use Bing because the search results are simply horrible. Something that would appear on page one of Google appears on page 6-7 or 8 of Bing. Until they improve the search accuracy to beat Google, I'll be sticking to Google thank you very much. This can be expanded further, if I want a blog with Microsoft's live service look at the weirdass address you're given by Microsoft when compared to blogspot which is a simple username.blogspot.com. The video system called Soapbox that didn't go anywhere because it offered nothing better over Youtube.

I'm sure others can add to the list of failures - but like I said, the solution isn't a simple as firing the CEO.

Edited 2010-06-01 07:12 UTC

Reply Score: 3

MS is changing
by kragil on Mon 31st May 2010 16:23 UTC
kragil
Member since:
2006-01-04

They see the writing on the wall and that is why this year they sponsor LinuxTag ;)
http://www.linuxtag.org/2010/de/partner-kopie-1.html

Joking aside. Who cares if they ever get new customers. The ones they have locked-in will pay enough every quarter to keep profits in the double digit billions each year.

So why should we care? MS will be the next IBM, there to service businesses. All hardware vendors (besides Apple) will ship FOSS.

Reply Score: 5

google_ninja
Member since:
2006-02-05

Yes, Microsoft is still incredibly profitable, but these profits come mostly from the Windows and Office product offerings. Microsoft hasn't successfully entered a new market in a long time now, and so despite the good profits, Wall Street hasn't rewarded Microsoft for them.


MS has entered loads of markets, they just haven't created or redefined any like apple has. They did quite well with smartphones and palm tops for years before apple changed everything. They have also become a major player in the consoles in a relatively short amount of time, which is a very tough space to get into.

Edited 2010-05-31 17:51 UTC

Reply Score: 3

phoenix Member since:
2005-07-11

You missed the "successfully" part.

There's no way you can consider them "successful" when they're at the bottom of the list for each market, even after 5+ years in that market.

Compared to RIM and Palm, Windows Mobile has never been successful.

Compared to Nintendo and Sony, Xbox is not that successful.

It's the same for every new market they've entered. They have a presence, sure. But there's no way you can say "being number 5" is successful.

Reply Score: 3

smashIt Member since:
2005-07-06

Compared to Nintendo and Sony, Xbox is not that successful.


at least ms is making money with their console, sony isn't

Reply Score: 4

Adurbe Member since:
2005-07-06

sony are making money on the playstation 'project' but the hardware itself is a loss-leader

edit: they make the money through the licences sold in conjunction with the playstation and you could argue that to include blue ray

Edited 2010-05-31 19:56 UTC

Reply Score: 2

smashIt Member since:
2005-07-06

sony are making money on the playstation 'project' but the hardware itself is a loss-leader


but thats the funny part:
reuters sayed that the ps3 is making sony money
but when you read the part in sonys report it only says that walkmans are making them money.
playstation is getting better, but no word on profit ;)

Reply Score: 2

arpan Member since:
2006-07-30

MS is making millions from the XBox now. But they have lost billions getting to this position. Spending billions and getting a few million isn't exactly something to be proud of.

Reply Score: 4

tylerdurden Member since:
2009-03-17

When did Microsoft lost "billions" on the XBOX? Or are you making up numbers to fit a narrative?

Reply Score: 2

segedunum Member since:
2005-07-06

Seriously, this information isn't difficult to find.

http://uk.gamespot.com/news/6140383.html

When Microsoft got into the console game in 2001, much was made of the fact that it lost an estimated $125 per console on each Xbox. Four years later, that per-console-hit has tallied to $4 billion of red ink for the Redmond...


They're still struggling to break-even:

http://uk.gamespot.com/news/6208456.html

Reply Score: 2

arpan Member since:
2006-07-30

Also, Sony's gaming division also includes the PS2 which still makes them a ton of profit, as well as the PSP.

Reply Score: 4

google_ninja Member since:
2006-02-05

you need to be number 1 to be a market leader, but you don't need to be a market leader to be successful. Apple is a great example, Macs have under 20% of the market, but the companies profit ratio is the best in the industry.

XBox is at around 20% of the console market, winmo was at about 20% as well before the iphone happened. Both of those would be considered successes by almost any metric. Not major revolutions like apple products tend to be that push the industry forward, but definately successes

Reply Score: 3

arpan Member since:
2006-07-30

Apple makes a boatload of money the sales of Macs and iPhones.

MS lost billions of dollars to that 20%+ share in gaming. Winmo wasn't very profitable either, and never brought in substantial income. That is why these two aren't considered successful. Market share isn't important, the profit is.

Reply Score: 1

tylerdurden Member since:
2009-03-17

Not entirely true. Profit is directly dependent on market share AND margin.

Market share is very important since it means you have to adjust your margin appropriately in order to hit the profit margin you need to survive.

Reply Score: 2

The Ballmer problem
by lasuit on Mon 31st May 2010 18:25 UTC
lasuit
Member since:
2005-11-02

One of the reasons that Ballmer is still the CEO, not to mention the reason he was originally picked, is that after Gates and Paul Allen he's the third largest shareholder. It's hard to say "no" to that. But, I agree with JLG's article. The time is coming where someone has to. Even though Ballmer will probably throw a chair at them.

Reply Score: 4

RE: The Ballmer problem
by Adurbe on Mon 31st May 2010 20:00 UTC in reply to "The Ballmer problem"
Adurbe Member since:
2005-07-06

Its also hard to sack a man who is still making billions in profit...

The argument for his dismissal is apparently the failure to dominate new markets. Is it realistic/fair to expect MS to dominate in every area? Is it not enough to have a presence and make money from it?

Reply Score: 2

RE[2]: The Ballmer problem
by elsewhere on Mon 31st May 2010 21:06 UTC in reply to "RE: The Ballmer problem"
elsewhere Member since:
2005-07-13

Its also hard to sack a man who is still making billions in profit...

The argument for his dismissal is apparently the failure to dominate new markets. Is it realistic/fair to expect MS to dominate in every area? Is it not enough to have a presence and make money from it?


It's easy to sack him, it just means you'll have to pay him out more.

At his level, making billions is less important than meeting targets and projecting future growth.

MS still relies on Windows and Office to drive the company. And that's fine, and probably a safe bet for the next several years to come.

But the smart investor has to ask where the growth strategy will come from. Realistically, who isn't running Windows? Who isn't running Office? Microsoft's biggest competitor is themselves, because their performance relies on convincing (or arm-wrestling) customers into upgrading their existing software to the newest software. In business terms, that won't cut it as a strategy for growth, because realistically the only way to head is down.

Every side project Ballmer has initiated has simply been an extempt to further lock down dependence on Windows. The XBox wasn't about breaking into a new market, it was about making sure that Sony wasn't going to morph into a new "living room" computing paradigm that could threaten Windows lock in the consumer market. Then it became a way to further extend Windows technology (ActiveX) and attempt to lock game developers to the Windows platform.

Zune was about making sure the iPod "Halo" wouldn't help lead Windows customers to consider switching to Mac. Their previous media attempts, such as plays-for-sure, were an attempt to ensure that Windows was the only platform that people would be able to integrate with the media players.

As for their online business, I'm not even sure that they have ever had a strategy their, except to make sure that their online experience was best experienced on Windows. Want to access Encarta online? There's an ActiveX control for that etc.

And why the hell does Microsoft really need to be in the web searching business? Why are they pouring billions into it? Google web search does nothing to threaten Windows. The threat comes from Google's other online services and apps. If they're concerned about Google, they should be investing that money in providing their own best-of-class web services and applications without lockdown to Windows, even if it means cannibalizing some of their own business in order to prevent Google from doing so. But no, if you want to use MS Office online, you'll need Silverlight for the "optimum" experience.

The list goes on. The common theme is that Ballmer sees a competitor successful in one area, determines that they may be able to extend that success to threaten Windows, so decides to attack them head on from a position of weakness by simply pouring billions at the problem. If he's worried about Apple/Google/man/dog becoming a threat to Windows, he should instead be investing in advancing Windows or related products to a point where it can remain strong, and so mitigate the threat those companies represent. Going head-on after the iPod or Google Search is simply a waste of resources that could be better spent improving what they already have, and leaving Zune and Bing to incubate as side projects to find their own way.

Ballmer has done an effective job as CEO towards extending and strengthening Windows and Office, generating countless billions in doing so.

What he has utterly failed at over the last decade, is in determining a direction or strategy that will *reduce* their dependency on Windows and Office, to truly expand into new markets and bring in new customers and revenue streams, rather than endlessly milking the existing ones.

Microsoft is simply too big to run as effectively as they did a decade ago. The product groups need more autonomy and they should be encouraged to embrace new technologies and ideas, even if they do not provide (or actively work against) a Windows lock-in strategy.

Certainly they shouldn't neglect Windows/Office, but it should be left as one business, with the other groups operating as pseudo-independent business units. Unless they can break their dependency on Windows, and quit tying all future strategies to further extending it's hold, they will hit a limit on how far their business can scale.

One can't help but wonder if a break-up wouldn't have been better for MS after all. Imagine one company focused on making Windows the best operating system, another company focused on making Office the best enterprise software suite on any platform, and another focused web services aimed at the widest possible market rather than tied to a browser, and forcing them all to compete, even with each other.

They need somebody with new ideas and fresh blood to re-energize the company and lead it into the next decade. I don't see Ballmer cutting it. Push him into the chairman's role or something, but let someone else truly take the reigns. And maybe try and encourage Bill G to come back for a bit; his business tactics may have been no better or worse than Ballmer's, but at least he had vision and understood technology.

Reply Score: 5

RE[3]: The Ballmer problem
by tylerdurden on Mon 31st May 2010 23:10 UTC in reply to "RE[2]: The Ballmer problem"
tylerdurden Member since:
2009-03-17

When you control over 90% of a market segment which is not going to disappear anytime soon, it is silly to think that not having an exit strategy from an established market segment.

There seem to be a lot of armchair quarterback CEOs in these sort of threads, who think their ever shifting goalposts somehow equate the reality of things.

Ballmer, as much of a buffoon as he is, will stay put because he did execute pretty well with Windows 7. And they have their windows mobile strategy in place. They will not be a dominant player in that segment, but Microsoft is far from being irrelevant in the mobile phone segment. And let's not forget that unlike Google, Microsoft actually makes money from each copy of windows mobile licensed.

Ironically, Microsoft has managed to weather the last massive recession relatively undamaged, while JLG could not even manage to turn a profit even at the height of the dot com boom. I have no clue why JLG's opinion should bet taken into consideration.

In the end, I don't personally like Ballmer, but we can't ignore the difference in track records between Ballmer and JLG. One has delivered, the second one has ran companies into the ground.

Reply Score: 3

RE[3]: The Ballmer problem
by phoenix on Tue 1st Jun 2010 22:20 UTC in reply to "RE[2]: The Ballmer problem"
phoenix Member since:
2005-07-11

Very well put. Couldn't agree more.

Reply Score: 2

RE: The Ballmer problem
by Karitku on Tue 1st Jun 2010 06:46 UTC in reply to "The Ballmer problem"
Karitku Member since:
2006-01-12

One of the reasons that Ballmer is still the CEO, not to mention the reason he was originally picked, is that after Gates and Paul Allen he's the third largest shareholder. It's hard to say "no" to that. But, I agree with JLG's article. The time is coming where someone has to. Even though Ballmer will probably throw a chair at them.

Actually JLG has several false info. Firstly Ballmer has been business leader of Microsoft for decades, this includes several successes such a XP.

Secondly it's fool to look stock market as indicator. One finnish professor ones show graph where he compared Nokia sales to stock prices and came conclusion that Nokia had to sell 2 phones per person in WHOLE planet per YEAR to meet up stock exceptions. Clearly few year later Nokia stock blumeted from 55 to 10. Main reason why Microsoft stock hasn't moved is because it's not very active stock. Microsoft is very solid stock and it returns money yearly, this is something that pension funds like.

Thirdly few points on Mr. JLG. He was Apple production leader in 1981 to 1990 before moving to Be Inc. which was huge success, no wait I mean disaster (business wise) before it was sell to Palm. After that he was director of many succesfull companies such as Cray which went bankcrupt in 1995, 3Com which lost competition to HP and was bought by it, and Logitech which amazingly is still alivea and indepented company. Clearly been such a succesfull business man he knows whats going in Microsoft.

Reply Score: 3

RE[2]: The Ballmer problem
by vodoomoth on Tue 1st Jun 2010 11:42 UTC in reply to "RE: The Ballmer problem"
vodoomoth Member since:
2010-03-30

Thirdly few points on Mr. JLG. He was Apple production leader in 1981 to 1990 before moving to Be Inc. which was huge success, no wait I mean disaster (business wise) before it was sell to Palm. After that he was director of many succesfull companies such as Cray which went bankcrupt in 1995, 3Com which lost competition to HP and was bought by it, and Logitech which amazingly is still alivea and indepented company. Clearly been such a succesfull business man he knows whats going in Microsoft.

Fair point there. All I knew about JLG was the Be thing. Wasn't Cray at one moment the manufacturer of a top 2 or 3 supercomputer?

Reply Score: 1

RE[2]: The Ballmer problem
by Thom_Holwerda on Tue 1st Jun 2010 12:00 UTC in reply to "RE: The Ballmer problem"
Thom_Holwerda Member since:
2005-06-29

Let me put it this way:

Between JLG and a random anonymous internet commenter, I'll pick the man who created the world's best operating system, okay?

Sounds fair?

Reply Score: 1

RE[3]: The Ballmer problem
by vaette on Tue 1st Jun 2010 12:57 UTC in reply to "RE[2]: The Ballmer problem"
vaette Member since:
2008-08-09

The anonymous internet commenter is just pointing out that JLG who is commenting on Ballmers work has a lot less to show for his business sense than Ballmer does. Which is a rather different matter.

Reply Score: 1

RE[3]: The Ballmer problem
by MissingBeOS on Tue 1st Jun 2010 13:27 UTC in reply to "RE[2]: The Ballmer problem"
MissingBeOS Member since:
2010-01-26

From my recollections, I don't think ANYONE could have kept Be, Inc. alive in the economic conditions they were forced to contend with. Nothing like not being able to get a single hardware manufacturer to install your OS as a dual-boot option to drive a spike through your IPO. Didn't matter one whit that BeOS was amazing, lightyears ahead of its time, nimble, responsive, etc., etc., etc. When you go up an 8,000lb anti-social behemoth like Microsoft, Bad Things Happen(tm.)

It's very easy to play Monday morning quarterback with the decisions that JLG made with Be; however, I read everything he has to say about topics like this with the knowledge that he is a very, very intelligent and savvy person. Just because Be, Inc. didn't make it is not any reason to disparage observations made by someone who had the temerity and brass ornaments to go up against Microsoft.

Reply Score: 1

RE[3]: The Ballmer problem
by vodoomoth on Tue 1st Jun 2010 16:19 UTC in reply to "RE[2]: The Ballmer problem"
vodoomoth Member since:
2010-03-30

Yes it does.
But having created the best OS ever doesn't void what Karitku said. Which is what I was judging a fair point, in the light, as I said, of the fact that I did not know any of that except JLG having been at the head of Be. The reasoning "this guy whose past is not exempt of business failures despite great products is giving lessons to a company he's not part of" is valid. Which, unless I'm mistaken, is what "fair point" means.

The part in bold is for what he/she wrote, and what I meant by mentioning the Cray supercomputer.

Reply Score: 1

What is their vision anyway?
by Haicube on Mon 31st May 2010 19:50 UTC
Haicube
Member since:
2005-08-06

I agree completely with the fact that MS hasn't done any real successful market entries for quite some time. However, I do think it's far to early to count them out just yet.

Sure, Ballmer is a tremendous problem. I'd even throw in that the biggest problem MS has is actually Windows itself. Because technically I'm certain they wanna go for Singular for instance, but practically that would be saying to the public, hey Windows sucks, switch to this instead. That simply won't work.

I also believe that people easily forget some facts. 90% of business users are OFFICE users. The day MS pulls the plug on MS Office for OSX (with whatever made up Steve JObs reason. Like that when a proper Intel box runs OSX you can toast on it...). They will get back quite a lot of customers simply because they have no option (I know I don't).

I also think that it is a bit hilarious people call Ballmer the marketing guy since it's MSFT being in the shadows while Steve Jobs has managed to get billions (maybe even trillions) in free marketing for iPad and iPhone alone.

Reply Score: 4

RE: What is their vision anyway?
by Kroc on Mon 31st May 2010 21:05 UTC in reply to "What is their vision anyway?"
Kroc Member since:
2005-11-10

TextEdit in OS X supports .docx. TextEdit. That’s the equivalent of WordPad in Windows. I can open documents people send me just fine and I don’t even have Office!

I reckon Apple are actually eagerly waiting the day Office for Mac gets pulled (as unlikely as that is because of anti-trust and that it’s actually profitable for Microsoft), then they can go it alone with iWork—touting its Office compatibility and rake in the profits themselves. Heck, even Mail.app and Calendar support Exchange out of the box; Windows doesn’t even have a mail app and calendar anymore!!

Even Microsoft know that it would be a very stupid idea to drop Office:Mac and permanently lose that market and suffer tougher competition in the form of Apple.

Reply Score: 1

Karitku Member since:
2006-01-12

It's called "Thinking differently" and giving choice to user.Something clearly unknown to Apple users today. Back to shackles slave! Also fucking politics has done this to Microsoft, basicly they can't put anything in Windows because it affects competition.

Reply Score: 4

tylerdurden
Member since:
2009-03-17

Unless he is speaking as an expert in running companies into the ground?

Reply Score: 5

Comment by FealDorf
by FealDorf on Tue 1st Jun 2010 04:38 UTC
FealDorf
Member since:
2008-01-07

MS is definitely suffering from stagnant leadership, it seems as if even though the company will continue making large profits, people will begin to ignore it. On top of it, he kicked out the two most capable executives inside the company.
I used to have a saying that "It takes Gates to get Jobs out of business" and it seems indeed that no one else is competent enough to obstruct Apple's success.

Reply Score: 1

Microsoft vs Apple is getting old
by spiderman on Tue 1st Jun 2010 05:38 UTC
spiderman
Member since:
2008-10-23

Microsoft and Apple were direct competitors back in the 80's and 90's. They had their fans who were fighting over the PC vs the Macintosh. I think this debate is obsolete. Comparing Apple to Microsoft is like comparing Toyota to Samsung. Apple is selling high margin hardware with software to support it. Microsoft is selling VERY high margin software first and some hardware where it cans. They don't compete that much these days. Watching the stock share rise and fall like a horse race is retarded in my opinion. The stock market is a casino, the price had nothing to do with the value of the companies.

Reply Score: 5

vodoomoth Member since:
2010-03-30

The stock market is a casino, the price had nothing to do with the value of the companies.

You're right but the stock market price says what people think about the future of the company.

Reply Score: 1

spiderman Member since:
2008-10-23

Or what people think people think. Or what people think people will think about it in the future. Or what people think people think about what people will think.
You get the point, the market does not tell anything useful at this point. It's just hysteria, overreactions to rumors and sheep rushes. The stock market is like a chicken without head. The traders don't actually know what the company does anymore and don't care anyway. They just play like in a casino and when the bubbles explode, they get a new deal.

Reply Score: 2

vodoomoth Member since:
2010-03-30

They just play like in a casino and when the bubbles explode, they get a new deal

yes, if they haven't turned crazy because of the money they've lost... when it's their money!

Reply Score: 1

Such bull
by vaette on Tue 1st Jun 2010 13:24 UTC
vaette
Member since:
2008-08-09

I have no idea what JLG is on about. My summary of the last 10 years:

* On workstations Microsoft was almost nowhere in 1999, NT 4 being rather new but the old UNIX workstations still being the big force, these were still the days of SGI and Sun. Everyone predicted Linux to eat this market. With Windows 2000 NT on the desktop came of age and Microsoft now basically owns this market. This happened somewhat invisibly, since one side effect of Microsoft eating this market was that the desktop/workstation differentiation pretty much disappeared. Lets note that BeOS back in the day was pitched as a media workstation, something that no longer exists since everything just runs on Windows with appropriate hardware added nowadays.

* In 1999 Microsoft was a minor player in the server market. NT4 had gotten going, but it was mostly a question of domain controllers. Since then Windows Server has become a real force to be reckoned with at all levels. There are 5 Windows machines on the top500.org supercomputer list, that may not be many, but who would have predicted it ten years ago?

* In 1999 Microsoft had nothing in gaming. Now they are one of the big three players, and for a long time looked like they had Sony (the 1999 top dog by a huge margin) down. The entertainment and devices business unit (which is where the xbox falls) had $1.89 billion in revenue in Q1.

* If we are to look forward Microsoft appears to have a surprisingly large momentum in hosted enterprise software (hosted exchange/sharepoint), which is basically a competitor for Google Apps, but actually appears to be doing better than Google Apps so far. Bing is actually looking like a credible effort at this point. It does not command a huge market share, but if we are looking for growth it hardly seems an improbable area now that they have (finally) gotten things together. It also remains to be seen how the Silverlight/.NET-tools play will work out once Windows Phone 7 rolls around and makes full use of it.

Of course Microsofts (lack of) growth looks bad compared to Apples, but all companies look bad compared to Apple at the moment. Someone has to be the best. Microsoft may not exactly be an unstoppable juggernaut in every market, but they sure seem to have come a long way since 1999 when they had Windows 98 and Office, and just about nothing else.

Most of all though, JLGs attempts to predict the market is almost laughable. Yes the Microsoft stock price is pretty low in light of their earnings. This is so since there isn't a perception that Microsoft is a fast-moving growth company anymore. The idea that the institutional investor ratio would have anything to do with this is just silly. The institutional investors pay that low price for their stocks, and get a cheap, stable and profitable stock out of it. Sure they may sell if they decide that that's not what they want, but they know exactly what it is they hold. The idea that they grow "tired" of Microsofts steady profits year after year is just silly.

Reply Score: 3