Linked by Thom Holwerda on Tue 9th Oct 2012 22:01 UTC
Microsoft Steve Ballmer's annual letter to shareholders makes it very clear Microsoft is at a point of no return - and in the middle of a transition into a hardware company. "This is a significant shift, both in what we do and how we see ourselves - as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses." Line. Sand.
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RE[2]: In plain English
by tanzam75 on Wed 10th Oct 2012 19:25 UTC in reply to "RE: In plain English"
tanzam75
Member since:
2011-05-19

Apple makes more money than Microsoft - alot more. That is just ridiculous when you consider the vast difference in number of employees and product mix between the two companies.


Indeed.

The iPhone has better (net) margins than Windows.

The world has truly turned upside down when a hardware device has better margins than a software package with a worldwide monopoly. That's why Microsoft has to move into hardware. It can't afford not to.

There are also some tangible financial benefits from bundling the software inside a device.

For example, China has a piracy rate of 77%. Every Surface tablet that it sells to Chinese consumers is equivalent to the profits that it normally would make from 4-5 Chinese Windows PCs.

In addition, Microsoft currently has over $50 billion of cash stuck overseas, because they do not want to pay the taxes to repatriate it. But it's free to import Surface tablets! In essence, Uncle Sam is subsidizing all US sales of the Surface by 10-15%, under the condition that the Surface be manufactured outside the US. (Talk about perverse incentives.)

Edited 2012-10-10 19:29 UTC

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