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."
Weird Co-incidence (Score:1, Interesting)
Time to fire some exectives (Score:3, Interesting)
That's pretty consistent (Score:3, Interesting)
Office and Windows have been their big profit centers for a long time. The big surprise there is that Office looks like it accounts for slightly more of their overall profit. And it was a surprise to see the margin on the server group. Back in the day I worked in a MSFT shop, it seemed like every day we were shelling out money for some license, another CAL or connector because the one we got didn't cover internet connections during a full moon, the support subscriptions that would regularly see large price increases, a piece of support software that was expiring. It was an every day thing that someone would come in and need money for something. Getting on without Windows servers is a blissful breeze in comparison.
You can argue the merits, but I find OpenOffice and GoogleDocs work for me. At home and the office. When we replaced Office with OpenOffice at the shop there weren't any complaints about the change. We did field a lot of calls about how to do stuff (mail merge), but there wasn't anyone crying for Microsoft leeks and onions. Although we didn't have anyone doing a lot of footnotes, either. If memory serves that's one feature of Word that pays for itself in a research setting.
Re:The chart is mis-labeled (Score:4, Interesting)
interest income? (Score:3, Interesting)
Re:Preparing for the Future or Buying Their Own Hy (Score:3, Interesting)
Are you kidding? Office 2007 was such a radical change in UI that it took me about 3X longer to put together a simple document over the prior version. And just to keep everyone who's ever used the product on an even level with the intern who's been there 6 months, there's no "classic mode" button!
I understand product managers get tired of just fixing bugs, but there's a reason we don't change keyboards and paper sizes every 20 years. Imagine buying a pen or pencil that now required you to hold it parallel to the paper instead of perpendicular. That's basically what MS did in Office 2007.
Re:Monkeyboy needs to go (Score:5, Interesting)
Not really. There are some interesting approaches to peer-to-peer search that don't really become feasible until consumer Internet connections are a bit faster than they currently are. I wouldn't be surprised if this is how the majority are searching in 10-20 years time. Meanwhile, Google will have branched out and will be less dependent on their search revenue. Microsoft might end up spending billions to buy their way into a market that doesn't exist anymore, just like they did with browsers.
Their strategy in the browser war was to make sure that no one could make money selling a browser. The unfortunate side effect was that this meant that Microsoft couldn't make money selling a browser either, but still needed to ship one to remain competitive. If they'd sold IE, rather than giving it away, and managed to keep 40% or so of the browser market, I wonder what their financials would look like now. Did IE really lock that many people into Windows? ActiveX was only really used in the wild for Intranet deployments, and in that case IE is used more as a distributed application client than a web browser, so the same lock-in could have been achieved by bundling an unlimited client license to IE with the BackOffice or NT Server.
Re:Weird Co-incidence (Score:3, Interesting)
Changes between versions of Office (Score:3, Interesting)
Re:Class action lawsuit ? (Score:5, Interesting)
IANAL either, but I don't believe a stockholder can simply sue a company for not being profitable enough. I know you hear all about how a CEO's only responsibility is to make short-term profit for shareholders, but I'm under the impression that it's quite a bit overblown. I believe it's more like, if you can show some kind of unethical behavior where they're purposefully sacrificing profits for personal gain, then you have some kind of case.
The way you hear it around here, you'd think a CEO can be thrown in prison for failing to screw an old lady out of her last dime because he has an enormous legal responsibility to maximize this quarter's profits. I have a hard time believing that.
Re:Preparing for the Future or Buying Their Own Hy (Score:5, Interesting)
And yet, a decade without innovation seems to have cost Microsoft nothing in terms of their core markets, and their experimental markets seem to be flat. Almost as if they are trying to push the market in a direction the market knows better than to follow.
What a surprise. If you want to sell an Office or Operation System the first thing your customers will ask you, how good does it support Microsoft Office file format or how good will my Windows only applications running.
It's good to have an almost monopoly, you just need to polish your old applications, make the binary formats slightly incompatible, so if some important person buys the new one, everyone else must upgrade, too.
I mean, what choice do customers have? It's either Windows 7 Starter or Windows 7 Home Basic or an Mac in the Apple Store.
Every school in the western world is teaching only Windows and Office. Microsoft is not a company, it's an institution. Every Computer vendor in this world have to support Windows and all the big ones are promoting Windows with everything they have. Just try to get a new Computer, everyone will have a "Xxx recommends Windows 7" and if Microsoft will have a new Windows 8, every big vendor will put a "Xxx recommends Windows 8", regardless of any quality.
For MS and the vendors it's a win/win situation. Microsoft have ads and it sells Windows, as well as other products that are build on top of Windows. The vendors get the Windows copy for free (or almost for free).
Just try and implement and sell a new system or office suite. The entry line to this market is like enter in the tourist space market or to colonize a new planet. But a system or an office suite are very simple applications. You need some know-how, but it's not rocket science.
Re:Ok, let's see (Score:3, Interesting)
I think it's a question of how long they expect to spend money on a strategy that hasn't succeeded in a long time. Office is an old product, Windows is an old product. They haven't done a lot since then that makes money in the same way.
Right now, it looks like Microsoft's strategy is to throw whole pots of spaghetti to the wall in the hopes that a couple strands stick, with a questionable profitability when they do stick, because the rest of the world may well have moved on to something else by the time their seed capital produces fruit.
Re:Class action lawsuit ? (Score:5, Interesting)
The short answer is no, you can't do that - they aren't losing the profits, they just may be investing them in other projects that have created business lines that aren't so profitable. That isn't illegal, it's a strategy, and it may eventually pay out or it may not.
Now, there are tools like filing proxies, or getting your own board members put in place, that are possible for groups of shareholders working together which can put significant pressure on companies to change their capital structure, dividend policies, share buyback plans and so on. And those have worked to some extent with Microsoft, which was pressured into paying out a huge one-time cash dividend 4 or 5 years ago.
Re:The chart is mis-labeled (Score:3, Interesting)
I don't know, what can you do with Win7 and Office 2010 that you couldn't do with WinXP and Office 2000?
Buy a new PC with it preinstalled.
What new improvements in productivity do you gain from them?
The same productivity that comes from the rest of the new computer with which the Windows operating system is bundled: a faster CPU, more RAM, a larger hard disk, etc.