Linked by Thom Holwerda on Fri 12th Feb 2010 22:55 UTC
Microsoft Sometimes, the sheer size of a company like Microsoft can make it quite hard to see and realise just how large and profitable such a company can really be. In these kinds of situations, there's nothing like a clear graph to make all those pretty numbers tangible. Up to a point.
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FellowConspirator
Member since:
2007-12-13

The sales parallel each other because most of the "sales" are actually filling existing contracts. At this point Microsoft doesn't do all that much retail sales and has very few new sales (in general, actually, their per-unit sales are decreasing). Most of this is software assurance, OEM contracts, etc. The reason they go up at the end of the year is mostly an artifact of the Windows 7 release date and the contract cycle time for OEMs and software assurance / enterprise licensees (when they offer a new licensing structure, they tend to convert large numbers of their licensees around the same time). Note that the "sales" here refer to license units, not installed units.

Microsoft's problem continues to be: they are now almost entirely dependent on the continuation of their large structured license agreements, and that they have been largely unsuccessful in adding novel products and services (that they pull revenue from). They profit from momentum, depending on organizations to purchase their products because that's what they've always done before. That's not a bad strategy since they've succeeded in raising the cost of migration away from their products to the point where it's simply not reasonable for most clients to attempt.

The other problem Microsoft is facing is that, for the first time, the installed units is lagging the licensed units by a pretty big margin. That is worrying, not because they'll loose customers, but eventually those customers are going to negotiate for fewer licenses and lower cost packages.

Where they are losing out is in nascent markets not already dominated by them. They've consistently failed to break into these areas and never profited from them (so the incentive to put effort in is low). Not only do companies not consider Microsoft in these areas, but they actively discriminate against them.

Reply Parent Score: 5

tomcat Member since:
2006-01-06

Where they are losing out is in nascent markets not already dominated by them. They've consistently failed to break into these areas and never profited from them (so the incentive to put effort in is low). Not only do companies not consider Microsoft in these areas, but they actively discriminate against them.


Actually, that's not accurate. Microsoft has made serious inroads into markets that it didn't control; for example, smartphones (Windows Mobile), game consoles (Xbox 360), and servers (Windows Server). However, it rested on its laurels in smartphones, failed to innovate, and allowed Apple and Google to wrest market share away. That doesn't mean Microsoft is out of the game, though. The irony of having Apple and Google battle one another over the smartphone market is that there probably won't be a single competitor that dominates in that space. It's more likely that each major competitor will control a small portion of the overall market, and that leaves the door open for Microsoft; although, frankly, they better do something ground-breaking, or their brand will be permanently damaged.

Reply Parent Score: 2