Where Microsoft's Profits Come From 295
derrida writes "Microsoft is the largest, most profitable software company in the world. In case you had any doubts about where Microsoft's profit comes from, there's nothing better than a graph to make all those numbers clear. As you may have guessed, the desktop division is quite profitable, while the online division is a money pit."
Interesting graph! (Score:4, Insightful)
What I find most interesting is the way all changes are perfectly synchronized with the exception of entertainment related stuff. This is clear indication of the power of vendor lock-in and tying unrelated products together.
What I would find interesting is to know what events occurred during the valleys and rapid climb moments indicated in the graph. Specifically, what happened in Dec '06 and Sep '09?
Re:Interesting graph! (Score:2, Insightful)
What I would find interesting is to know what events occurred during the valleys and rapid climb moments indicated in the graph. Specifically, what happened in Dec '06 and Sep '09?
Vista.
Ok, let's see (Score:5, Insightful)
We look at the graph: MS is losing like 500Million per year on the Online Division
Then we look at the other graph and sees that Windows and Office has a 2Billion a year profit, EACH
And then we have to read crap like this: "We wonder when Microsoft will finally decide to do what it should have done years ago: Save its money and flush its entire online division down the drain."
No hon, SteveB is stupid, but not as stupid as you. It's called 'strategy', look it up. If it's working or not it's a whole different matter.
Re:Interesting graph! (Score:5, Insightful)
Are you sure that isn't just how the graph looks because it is stacking the data series on each other?
What surprises me is the massive boost in OS profits in Dec 09. Could that really be Windows 7, and if so, how? It costs about the same as XP/Vista, and it's not as if people are buying Windows 7 off store shelves to upgrade older computers (are they?)
Comment removed (Score:5, Insightful)
Re:Interesting graph! (Score:5, Insightful)
Re:The chart is mis-labeled (Score:0, Insightful)
Indeed, office 2000 and office 2007 are esentially the same product. And Windows 7 is worse than XP.Microsoft has been living all this decade by selling stuff they already had and didn't significantly improve, MS is the biggest scammer in the world.
Google (Score:2, Insightful)
And Google's cash cow is search advertising and loses money hand over fist on YouTube ($753m last year).
Comment removed (Score:4, Insightful)
Eggs all in one basket, and an old basket at that (Score:5, Insightful)
They make their profit on their monopoly products and lose money on almost everything else. That is why the methods they use to maintain these monopolies continue to be the subject of antitrust investigations.
This also demonstrates that they are very good at maintaining their monopoly, but not so good at successful new product development. With a stagnant pipeline, they are especially at risk as FOSS alternatives like Linux, Firefox and OpenOffice become less "alternative" and more "maintstream".
Re:Interesting graph! (Score:5, Insightful)
What I find most interesting is the way all changes are perfectly synchronized with the exception of entertainment related stuff. This is clear indication of the power of vendor lock-in and tying unrelated products together.
No. It's a clear indication that TFA used a Stacked Line Chart [microsoft.com]. If you were to move Office and Server to the bottom of the stack, you would see that they both account for relatively small sales bumps (~1 billion), with the real movement coming from the release of Windows Vista (Mar '07 bump) and Windows 7 (Dec '09 bump).
Normally you avoid data distortions like this by putting the least-variable data at the bottom of a stacked chart. I think "Chart of the Day" needs a better-trained Excel monkey.
Re:Ok, let's see (Score:5, Insightful)
They are not "expanding their business." They are keeping potential competitors at bay.
Do you recall what MSIE did to Netscape who, at one time, threatened to make their own OS?
There is a reason they are willing to lose lots of money in online activities. Their willingness to lose money will mean that any emerging competitor will also have to be willing to lose money. Is Google a competitor? Is Sony with its PS3 or Nintendo with its Wii a competitor? You betcha! Even though they are not "desktop" competitors now, they are changing the market in favor of appliances -- network enabled appliances -- the kind of computing that has been foretold by many for the past decade. The OS may become irrelevant so long as file format and protocol standards are non-proprietary.
You are right in that Microsoft has a larger vision -- it sees its own demise and is actively working to keep anything new from rising up to render them irrelevant.
Re:The chart is mis-labeled (Score:5, Insightful)
Re:Interesting graph! (Score:3, Insightful)
Unlikely - Office 2003 works on Windows 7 and Office 2010 will work on Windows XP.
Re:Class action lawsuit ? (Score:2, Insightful)
Dividends? How quaint! The profits are there to line the CEOs pockets and to allow 'journalists' to fluff up the share price. The only way you (or any outsider) to make money is to buy low and sell high. Investing is so last century. Gotta Gamble Baby!
Re:Interesting graph! (Score:2, Insightful)
Point taken.
If you hadn't linked me to a Microsoft page that made my Firefox go crazy after I enabled javascript, I would have responded sooner. (I'm not saying that Microsoft's page is hostile to my installation of Firefox exactly, but I have not rebooted my computer in a few weeks despite having installed updates that could easily be trampling all over one another at the moment... however, all other web page browsing seems normal until I enable javascript on that page. Seems odd. I love the "no script" addon... lets me control who affects/infects me better.)
After staring at the chart, I see what you mean. I did, in fact, misinterpret the graph. I think a stacked graph like that is appropriate for that display of information at all. While placing the least varying data at the bottom would serve to reduce the possibility of misinterpretation, it would not eliminate it. The page linked to actually shows a better and much more appropriate implementation of stacked data of this sort... a stacked bar chart.
My original statement was generally true, but using that chart to evidence the asserting was incorrect.
Re:Monkeyboy needs to go (Score:3, Insightful)
Look at the big picture and realize that it isn't so much a direct revenue goal they have for things like browsers or search engines, as it is to ensure their cash cow stays a monopoly.
Netscape, as it was pointed out a few posts ago, planned to make its own OS. Google now actually did just that. Browsers and even more search engines are key to influencing people's opinions. You can easily, if you control a search engine, boost your opinions and cripple your competitors. Is is, in fact, for many people their window to the web. It would be trivial for Google to push a sizable portion of internet users towards their OS and hush up about Windows if they chose so, whenever people look for a "good" OS for their computer. If they make it similar enough to Windows that people don't notice the difference, they won't complain.
Unless of course there was an alternative for Google as a search engine that you could instead turn to should they provide bogus, biased and outright forged search results to push their own agenda.
Competition is good. Even if MS is for a change not the one that tries to hold a monopoly, basically Bing is what forces Google to be "not evil".
Re:Ok, let's see (Score:2, Insightful)
Why does Microsoft think that search is such an important thing
This goes into philosophy of how a business profits from the Internet. There are basically two ways: creating content for people to buy, or telling people how to get to content and selling the re-direction as a service be it to advertisers or any other buyer. Theoretically, someone could charge directly for Search itself.
Google built the most successful business model of telling people how to find stuff. And that is why Microsoft thinks that Search is so important. Microsoft makes money on selling people their content. That business is old-growth and stable. Which, in business, means that it is subject to atrophy and decay. To quote Ray Kroc, the man who understood business as well as anyone (He bought McDonald's from the McDonald brothers and grew it into the behemoth it is today), "When you're green you're growing. When you're not, you're not."
Microsoft has to keep trying to find ways to grow their business. Owning a piece of the search infrastructure, even if it's not being used but is available, is part of their growth strategy. Microsoft doesn't have to dominate. They just have to offer a compelling alternative to Google. Whether they do or not is beyond the scope of this comment.
same story in Macintosh days (Score:2, Insightful)
Recently I came across Guy Kawasaki's lectures. In one of them he mentioned, back in the 80s when he was a Mac-Evangelist, Macintosh department employees were given world class treatment like professional massage treatments during working days, First Class air tickets if the flight is 2+ hours etc.
But in reality, Macintosh wasn't earning a dime and continuing the spending spree of all what Apple II department was earning. In return, not a single Apple II employee was permitted to enter the Macintosh building.
I observe some similarity here in Microsoft too (i.e. one department earns, other spends). But seems it is not that bad.
In my humble opinion, I predict the demise of Office and Windows OS in next 10 years (maybe there will be cloud versions). I believe Microsoft will move into more enterprise/back-end technology space rather than remaining in desktop/consumer space (just like IBM). But nothing can be predicted to a higher accuracy, as the internet backbone is yet to achieve higher bandwidths and reliability, which is somewhat mandatory before a full migration in to a cloud based software eco-system.
Re:The chart is mis-labeled (Score:5, Insightful)
I don't know, what can you do with Win7 and Office 2010 that you couldn't do with WinXP and Office 2000? What new improvements in productivity do you gain from them? How did they lower your other costs (e.g. hardware)?
Well, new versions of Office simply exist to force you into their new file formats. Office 97, simply put, does everything anyone could want, and does it well. The only real selling point for the latest iteration is the collaboration technology in it, and even then, that's only good for you if you're using it in a business or groups. There's really no practical justification for a home user to upgrade Office.
Windows 7 though, that's a bit different. It appears that MS has really given us a reason to move on from XP, with better graphics support and better security, without the bugs of nags of Vista. Windows 7 is really what Vista should have been. And it would be more compelling if all versions of 7 were 64 bit native, as CPU's have been 64 bit for quite some time now. The 64 bit part would be the real selling point here, as it would allow all versions to move past that 4 GB memory limit, hardware permitting. For a lot of people, the only reason they really had to move to XP from 98SE was the file system limits on FAT32. While 98 was more stable than 95, the reason I upgraded was the 2 GB FAT limit that was smashed with FAT32. Microsoft too often forgets that we need practical reasons to upgrade, not just shiny eye-candy. And real practical reasons, not artificially forced situations like their new Office file formats. The only reason they did that was to force businesses away from 97 and 2K.
Re:Interesting graph! (Score:3, Insightful)
Re:Weird Co-incidence (Score:3, Insightful)
Re:Monkeyboy needs to go (Score:4, Insightful)
That's a pretty big leap. How many people are really locked in to IE? I can't remember the last time I came across a site that didn't work in Safari. Back when I was on Windows, I was using Mozilla and then Opera from around 2000, and I don't remember seeing any sites that I couldn't open in one or other of them even a decade ago.
Corporations are locked into IE as a client for their Intranet platform, but MS didn't need to win the browser war for that to happen. They just needed to make people write IE-only Intranet apps, something that was pretty easy given that most of the apps of that era were ActiveX ports of Windows-only apps.
I doubt the Windows market share figures would be very different if IE had stayed at under 50% market share.
Re:The chart is mis-labeled (Score:3, Insightful)
Office 97, simply put, does everything anyone could want, and does it well
That's just not true. Try publishing a book with Office 97. Suppose you want to change the style of your section headings. LaTeX can do it with a simple change in your header. Just edit a couple of lines and you're done. Or, suppose you want to change the style of references in your bibliography. Again, just a few quick edits in LaTeX. I have no idea how you'd do that in Office 97.
While I can't say that Office 2010 offers anything over Office 97(due to lack of experience), it is definitely not the case that Office 97 does everything one could want. I have heard that the equation editor in 2010 is much better, FWIW.
Re:Interesting graph! (Score:3, Insightful)
No. MS Office is not included with retail systems, except as a free trial or build-to-order option. A lot of christmas computer shoppers don't buy or use Office at home.
Re:The chart is mis-labeled (Score:3, Insightful)
Windows 7 has some nice advantages as well - it's faster, has better 64-bit support, some nice improvements to the UI (such as pinning items to the taskbar), is more secure...
Are either of them "must upgrades for everybody"? No. Some people will do just fine staying on Windows XP and Office 2000. But a lot of people, especially folks who are power users, will find a lot to like in the new versions.
Re:Interesting graph! (Score:3, Insightful)
All of the products are closely tied together. Most recently Office has been tied into SharePoint. SharePoint obviously has a lot of good ideas built into it. If it didn't Google wouldn't be trying to offer up similar functionality. From my brief experience with SharePoint I've seen it leveraged as a groupware and project management tool. At one architectural firm they are using it to tie all of the reams of documentation together (blue prints, materials samples, project documentation (based on Word templates), cost figures (based on Excel spreadsheets), marketing documents (the architecture firm does a lot of commercial property, movie theaters, etc.) I've also seen it used by a clothing manufacturer to streamline their processes. Like the architecture firm, they were already using Microsoft Office applications (primarily Excel) for their processes but SharePoint gave them a central repository. Specifically there was a feature that allowed a document to be checked out into an Office application, worked on by the person responsible for a particular step of the overall process, and then uploaded back into the repository. The upload function would sent a message via Outlook to the next person in the chain of responsibility.
All of the functionality that Microsoft is using "just" expands upon the ideas that have been forwarded elsewhere like a wiki, a repository (a la Subversion, etc), a groupware client (Google, et al). There are SharePoint specific tools for Visual Studio. The thing is that Microsoft makes it a one stop shop. Now, nobody is going to say that is an inexpensive one stop shop. Fewer people would say that is a secure shop. But it is technology that delivers value to businesses, and things like security and expense can be mitigated. In the example of the architectural firm, they don't need as many project managers and their projects take less time because what used to be a manual process has been shifted over to SharePoint. With the clothing firm it reduced their time to market on new designs because their internal processes were sped up.
Technologies like SharePoint used to take multiple servers (SQL, IIS (web), backup). Five years ago each one of those roles was a separate physical box. With the advances in processing power and virtualization, each one of those servers can be hosted on a single physical box.
I realize that I probably sound like a Microsoft shill. I'm just an IT guy who has been employed for fifteen years. That's significantly less than a lot of people on /. but it is long enough to develop a first hand perspective on how businesses are using the technology. I see a lot of companies that are challenging parts of Microsoft's overall business. I haven't seen anyone offer the entire solution. Google is coming close, but they still have a ways to go. One big benefit they have is that they will host the solutions for people. That is the market shift that Microsoft might miss. If they continue to expect their customers to eat the cost of onsite hardware, they are going to get clobbered once Google (or someone else) offers the same functionality.
Re:The chart is mis-labeled (Score:3, Insightful)
"Microsoft tells us it's time to upgrade".
That might be true except for the giant period you ignored where almost everyone didn't upgrade to VIsta, funny XP gets all this praise after years of being torn apart as the most insecure OS during the Vista release and even after the excuse that Vista was bloat which Win7 came along to fix people still complain.
Win7 replaced an old copy of WinXP on an old Dell 1150 laptop and it actually runs better even though I only invested $30 for 2GB of ram at FRY's, even though I had to do a quick google search for video drivers everything else(wifi,burner,etc) worked perfectly fine.
MS used to always be great at the compatibility part and terrible at security/stability, but they have really fixed those two other voids with Vista/Win7 and the ball is in their court. Linux missed the biggest opportunity to capatilize on MS's blunder with Vista and there might never be a chance again for 15+ years considering how stable Win7 is.