Linked by Thom Holwerda on Mon 18th Feb 2013 21:18 UTC
Microsoft "Although Bill Gates stepped away from his day-to-day role at Microsoft nearly five years ago, he still keeps a close eye on the company he co-founded - and he isn't always happy with what he sees. During a recent interview broadcast this morning on CBS This Morning, the Microsoft chairman was asked by Charlie Rose whether he was happy with Steve Ballmer's performance as chief executive. Noting that there have been 'many amazing things' accomplished under Ballmer's leadership in the past couple of years, Gates said he was not satisfied with the company's innovations." It's impossible to deny by this point that Microsoft hasn't done well in mobile. It would be more surprising if Gates had denied it.
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RE[4]: Comment by lucas_maximus
by tanzam75 on Tue 19th Feb 2013 07:22 UTC in reply to "RE[3]: Comment by lucas_maximus"
tanzam75
Member since:
2011-05-19

IBM fading away?? Let's compare financial returns between IBM and Microsoft for the past 10 years, shall we?


You have plotted IBM's stock price against MSFT's stock price. That tells you nothing about how well the company has done financially. All it does is indicate how the stock market perceives each company.

Since the end of 2007, IBM's stock price has clearly outperformed MSFT's.

However, when you look at actual financial performance, you see something quite different. Microsoft's financial results have clearly outperformed IBM's over the past ten years.

Operating income, net income, dividends, net cash, you name it. On all of these bottom-line metrics, Microsoft has done better than IBM over the past ten years.

Here, have a look for yourself:

IBM's annual reports: http://www.ibm.com/annualreport/
Microsoft's annual reports: http://www.microsoft.com/investor/AnnualReports/default.aspx

Reply Parent Score: 4

sgtrock Member since:
2011-05-13

None of which invalidates my main point: When comparing the two companies, Microsoft is the one who is in danger of fading away, not IBM. Microsoft's annual reports only serve to highlight what I stated. Read the financial breakdown by segment in the 2012 annual report that starts on page 22 as a typical example.

I only pointed to the share price comparison because it shows the fact that investors have become disenchanted with Microsoft's lack of ability to innovate in any market. There's a lot of smart money out there that sees the same set of conditions that I pointed to. Now, if you have some evidence that can refute my argument I'd love to hear it.

Edited 2013-02-19 14:41 UTC

Reply Parent Score: 2

tanzam75 Member since:
2011-05-19

You have presented a very distorted view of Microsoft, by taking the dozens of products that it sells and splitting it into two groups -- and then calling it a "two-trick pony."

Well, I can do the same thing to IBM, and show that it is also a two-trick pony. One trick is mainframe/services. The other is everything else. IBM gets just 4% of revenues from mainframe hardware, but 40% of its profit is tied to its dominance of the mainframe world. ( See http://www.nytimes.com/2012/08/28/technology/ibm-mainframe-evolves-... )

Oh, but you say, this is unfair. You can't look at the 40% of profit that comes from mainframes, because it is a very diversified revenue stream. Hardware, software, storage, management, consulting services, etc. And what about the other 60%? "IBM has an incredible range of successes over the same period. You just don't hear about them much unless you work in or near datacenters."

Well, yes, it is unfair. But so is your characterization of Microsoft. "Windows/Office on the desktop" encompasses everything from the familiar Word and Excel, to consumers products like Skype, to pricey enterprise software like Dynamics CRM, to Lync unified communications, to management tools like InTune. "Windows/SQL Server in the datacenter" ignores things like Sharepoint, Exchange, Exchange Online, Azure, Hyper-V, System Center, etc.

You could just as easily say that Microsoft "has an incredible range of successes over the same period. You just don't hear about them much" -- unless you work in IT.

SQL Server is coming under attack from open-source? Sure. But so are Oracle and DB2. Why is Microsoft any worse off than IBM, which sells DB2? Supercomputers, mainframe, IIS? You're getting hung up on markets where Microsoft never made much money. So if Microsoft never breaks into these markets, how does this cause Microsoft to disappear?

Is IIS losing share in enterprises? I don't know -- perhaps. Yet the Server & Tools division at Microsoft has grown faster than Microsoft overall in recent years. If Microsoft is disappearing in the enterprise, then why aren't its revenues going down in the enterprise market?

What Microsoft is doing is moving from full-spectrum dominance, in which it had a hand in every pie, to a situation in which the IT world has outgrown it. In the enterprise market, Microsoft has discovered that even a non-monopoly position can be quite profitable. This is not so different from the transformation that IBM has undergone.

Edited 2013-02-19 17:46 UTC

Reply Parent Score: 3