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Microsoft The Almighty Buck

Microsoft Posts First Quarterly Loss Ever 327

Posted by samzenpus
from the hole-in-the-bucket dept.
HangingChad writes "Microsoft's announcement of a late October release date for Windows 8 was eclipsed by its earnings report, in which the computer giant posted its first-ever quarterly loss since going public in 1986. The loss stems from Microsoft's continued struggles with the online services division."
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Microsoft Posts First Quarterly Loss Ever

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  • Yay! (Score:5, Funny)

    by Anonymous Coward on Thursday July 19, 2012 @06:17PM (#40705557)

    We waited for this for too long!

    • Re:Yay! (Score:5, Funny)

      by Anonymous Coward on Thursday July 19, 2012 @06:24PM (#40705645)

      Yes!! They are totally in their final days! If they do this 80-100 more times they'll be finished!!!

      • by Anonymous Coward on Thursday July 19, 2012 @11:44PM (#40707725)

        50 million Windows 7 licenses/quarter.
        76 million Android activations/ quarter
        46 million iOS devices, 50 million is you add the Mac sales / quarter.

        See for yourself, they're market share is down to less than 30%, soon Apple will be selling more iOs devices than Microsoft sells Windows.

        • by asdf7890 (1518587) on Friday July 20, 2012 @03:01AM (#40708699)
          That isn't really an apples-to-oranges comparison though. The desktop/laptop markets are different enough from the phone/tablet ones at the current time that you probably shouldn't compare Windows 7 against iOS and Android.

          Also iOS and Android are growing fast due to new kit the people previously didn't own - they are not replacing Windows in most cases. MS's install base is rather impressive compared to iOS and Android so even at their current growth rate (which they can't maintain indefinitely - there will be a saturation point in the market somewhere) it'll be much time before they come close to eclipsing Windows.

          I'm happy for you to put Microsoft down, but I recommend not using obviously flawed statistics as it just looks like desperation (when such desperation is probably not required).
          • Yes but my empirical analysis of first world citizens leads me to believe that the end setup for the avg person - and after the mobile market gets saturated - is two mobile devices (phones, tablets) and one Classical personal computer (laptops and HTPCs included).

            Which means that after market saturation you should on average have twice as many mobile OS images as PC OS images installed. The mobile computer market will keep on becoming bigger and bigger there is no question in that. I just hope that we will

        • by Xest (935314) on Friday July 20, 2012 @04:55AM (#40709203)

          Wait, you forgot to include my fridge and central heating system, neither of these run Windows either. Christ, even throwing servers into the mix where operating systems like Linux hold a greater share would make more sense than mobile.

          Honestly, I'd like to see more competition in the desktop OS market too, but pretending desktop licensing and mobile operatings systems are in the same market is fucking stupid.

          Mixing some arbitrary devices into the OS mix doesn't change the fact that Microsoft is still far and away the most dominant entity in the desktop/laptop market.

          It doesn't really matter how many iOS devices Apple sells or Android devices Google and friends sell, people still aren't going to be writing software, producing spreadsheets, creating presentations, creating web pages, using most business systems, and authoring documents, on their tablets and phones. Have you tried doing any lengthy amount of office work on a mobile device? Without turning it into a desktop/laptop by attaching a keyboard/mouse it's the quickest route to insanity. Tablet versions of much common desktop software such as Office pale in comparison to the real thing. For this reason the key point is that no matter how many extra smartphones/tablets are sold out there, the effect on Windows desktop license sales is going to be negligible. People may be buying tablets, but few are foregoing a PC/laptop as a result, they just get both. Christ, up until recently you couldn't even activate an iOS device and get content onto it without a computer anyway.

          Yes mobile is becoming ever more important, no it's not going to replace the desktop, it just extends where you can do some of your desktop work (e-mail, web apps). Touch is great, but it's not the be all and end all, it's an extremely shit input method for many, many common tasks still.

          This is why you can't lump mobile and desktop together, for the most part they're different markets, the areas in which they intersect are fairly small and limited to for example, situations like tablets acting as a good carry round the home web browser instead of a netbook.

          • by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Friday July 20, 2012 @10:29AM (#40712801) Homepage Journal

            I'd like to see more competition in the desktop OS market too, but pretending desktop licensing and mobile operatings systems are in the same market is fucking stupid.

            I'm sorry, but did you think that "desktop computing" and "mobile computing" were markets? The market is simply "computing".

            It doesn't really matter how many iOS devices Apple sells or Android devices Google and friends sell, people still aren't going to be writing software, producing spreadsheets, creating presentations, creating web pages, using most business systems, and authoring documents, on their tablets and phones.

            Outside of an office, almost no one wants to do those things. (Note: you, I, and the rest of Slashdot don't statistically count. We're a tiny minority.) People want to share pictures, browse the web, listen to music, watch movies, and do lots of other things that phones and tablets are perfectly good at.

            People may be buying tablets, but few are foregoing a PC/laptop as a result, they just get both.

            Have you talked to anyone outside an office? I personally know plenty of people who bought an iPad and abandoned their desktops and laptops. When it comes time to upgrade their less-portable systems, the thought process becomes "you know what, I don't really use it anymore. I guess I'd like to run ${application foo}, but not so much that I want to buy a whole new computer just for it, and have to set aside desk space for it, and it just sits there the rest of the time..."

            This is why you can't lump mobile and desktop together, for the most part they're different markets, the areas in which they intersect are fairly small and limited to for example, situations like tablets acting as a good carry round the home web browser instead of a netbook.

            "This is why you can't lump digital and film cameras together, for the most part they're different markets, the areas in which they intersect are fairly small and limited to for example, situations like digital cameras acting as a good carry round the city camera instead of the nice film camera that they'll keep around for Important Stuff."

            How'd that work out?

        • And how many Windows 7 licenses have been issued to date? 600 million? Different markets, different sales slopes. iPhones don't replace PCs for the overwhelming majority.

          Also, check your numbers.

      • Re: (Score:3, Informative)

        by BeanThere (28381)

        This sounds more like it was a major once-off write-off of a loss-making division (a "me-too" attempt at online advertising to try compete with Google - hell, I didn't even know Microsoft had such a division until I read this), rather than necessarily an indicator of poor cash flow. So I wouldn't be ringing that death knell quite yet. The way Apple's going with their increasingly patent-troll-based business model, we might yet want to see strong competition between all the major players rather than consolid

    • Re:Yay! (Score:5, Insightful)

      by danomac (1032160) on Thursday July 19, 2012 @06:25PM (#40705651)

      Microsoft made a bad acquisition and they lost money. They have a long way to go before their situation gets dire.

      I guess when you're big enough you can do a six billion dollar oops and nothing much happens.

      • Re:Yay! (Score:4, Insightful)

        by HermMunster (972336) on Thursday July 19, 2012 @06:39PM (#40705819)

        This is nothing more than creative accounting meant to give them a mean tax write-off at FY-End. They didn't really make money. Nothing they bought that showed a loss could possibly eliminate billions a quarter in revenue and profit.

      • by tompaulco (629533)
        I guess when you're big enough you can do a six billion dollar oops and nothing much happens.
        They didn't lose $6 billion, only $583 million. And if they fired the right 50 people, then they would have broken even (well, except for having to pay the golden parachutes of those same 50 people).
        • by SurfsUp (11523)

          I guess when you're big enough you can do a six billion dollar oops and nothing much happens.

          They didn't lose $6 billion, only $583 million.

          No, they lost $6 billion+ on Aquantive. Thanks for playing.

    • Re:Yay! (Score:5, Insightful)

      by Johann Lau (1040920) on Thursday July 19, 2012 @07:15PM (#40706143) Homepage Journal

      I kind of stopped wanting Microsoft to die. We need something new that DOESN'T suck (not just one, make that 2-3). Death of MS would accomplish nothing but more consolidation for the other poopyheads.

      • Until there's something out there that "doesn't suck", I'd like Microsoft to remain healthy and viable.

        Apple's walled garden where everything will soon have to be bought through the app store and whose server product is laughable? Nah.

        Linux flavor of the week that totally ignores the need for corporate Groupware and thumbs it's nose at the idea of a homogeneous environment? Nah.

        BeOS? Mayyyyybe

        So I suppose one option is better than none....

      • Re:Yay! (Score:4, Insightful)

        by Billly Gates (198444) on Friday July 20, 2012 @01:52AM (#40708443) Journal

        I kind of stopped wanting Microsoft to die. We need something new that DOESN'T suck (not just one, make that 2-3). Death of MS would accomplish nothing but more consolidation for the other poopyheads.

        Apple is enemy number 1 right now. Not Microsoft. For the older folks on here they remember IBM as the bad guy and MS as the good guys and so on. I really do hope Windows Phone 8 succeeds yes I know slashdotters may not agree with me, but it is good for competition. Google could decide it is not worth it to be sued and sign an agreement with Apple to leave the market and have them only use Google services or something scary. You never know. Infact, if the lawsuits get worse I would do just that if I were Schidmt at Google. Andriod is a loss leader anyway they make money with searches.

        Anyway not to go offtopic competition is good and slashdotters should consider their stance on Microsoft. They are not the scary guys who made crapware 10 years ago anymore. Windows 7 !=WindowsME/Dos4, Windows Phone != WinCE, and IE 10 != IE 6.

        Apple is pretty cool still for many so my post is controversial but Apple scares me much more than MS and they are far more powerful now. Just my 2 cents even if they do make a Unix like consumer oriented OS.

  • by Anonymous Coward on Thursday July 19, 2012 @06:23PM (#40705631)

    The loss stems from a giant write down of a purchase gone bust ($6.2billion) from 2007. Otherwise it would have been a great quarter for "M$".

    But don't let that stop the speculation about how "M$" is about to die.

    • by santax (1541065)
      Not a fan of them, but I was thinking the same. That really pulled them down and people are waiting to buy new pc's/laptops for when win8 comes out. The poor bastards.
      • by cpu6502 (1960974) on Thursday July 19, 2012 @08:06PM (#40706505)

        Not me. I'm buying a new PC/laptop NOW while it still comes with Windows 7, versus getting stuck with Vista Part 2 (Win8).

        Oh and not everything is bright & shiny. The article continues: "The charge was an acknowledgement that the companyâ(TM)s struggling online services division is a significant financial drag on the company, losing nearly $2 billion over the past year in addition to the $6.2 billion writedown. Microsoft is still pouring money into runner-up search engine Bing, but it only has a fraction of the market share rival Google enjoys. "It brings into question Microsoftâ(TM)s ability to compete on the advertising-driven web and suggests this is a market segment that is beyond Microsoft, creating long-term doubts over Bingâ(TM)s future," Rob Enderle, principal analyst at the Enderle Group, said via email."

    • Flamebait? I hate MS as much as the next guy, but the AC above is accurately pointing out factual errors in the summary. It's deceptive (and raises false hope in some).

      • by oakgrove (845019)
        Um...from the summary:

        The loss stems from Microsoft's continued struggles with the online services division

        Was not the 6 billion dollars they wasted on aQuantive an effort to better place themselves in the online ad sales picture?

        • by LordLucless (582312) on Thursday July 19, 2012 @07:40PM (#40706327)

          It's not from their "continued struggles", it's from a single acquisition 5 years ago. And it says nothing about their online services division as a whole, just the advertising segment represented by aQuantive. It'd be like saying "Google's online services take 600 million dollar hit" if Google decided to scrap Google Flights.

          • by oakgrove (845019)

            It's not from their "continued struggles"

            MS' online division isn't continuing to struggle? How much money is Bing making these days?

    • by jcr (53032) <jcr.mac@com> on Thursday July 19, 2012 @06:44PM (#40705859) Journal

      They're not going to die this year, but they do have a long decline ahead of them, just like IBM in the 90s. Ballmer's been wasting the shareholders' money on failing ventures for many years now, and the Windows/Office cash cow is running out of steam.

      -jcr

      • Break Them Up (Score:5, Insightful)

        by geoffrobinson (109879) on Thursday July 19, 2012 @07:21PM (#40706183) Homepage

        They would actually be more valuable broken up. Windows could still do their thing. Office could support whatever platform they wanted to. Imagine a version of Office for Mac with a comparable version of Excel and Access. SQL Server on Linux boxes.

        Also, I would say there is a difference between decline and not being in your high growth phase and abnormally dominant phase.

      • by bitt3n (941736) on Thursday July 19, 2012 @07:58PM (#40706461)

        the Windows/Office cash cow is running out of steam.

        I think this is a relevant moment to reflect on that timeless investment maxim, "never put money in a company whose profits depend on a steam-powered cow."

      • by SurfsUp (11523)

        They're not going to die this year, but they do have a long decline ahead of them, just like IBM in the 90s.

        Unlike IBM they won't pull out of it because they have no lucrative hardware business to fall back and no loyal stable of clients to turn themselves into a service operation. And unlike IBM, who only earned the hatred of a few thousand professionals, Microsoft has earned the hatred of millions and is still working on it.

        For Microsoft, this ends at $0 per share.

    • by je ne sais quoi (987177) on Thursday July 19, 2012 @07:53PM (#40706417)
      It was in fact NOT a great quarter for Microsoft. I agree that the $6.2 billion loss on the acquisition is a red herring, but if you disregard that and look at the rest of their business, you'll find that their windows revenue declined 13% [nytimes.com] Yes, DECLINED 13%. Now, you can further write off most of that decline by saying that this is due to the reduced cost of Windows 8 that Microsoft offered to people buying Windows 7 now, but even after you do that, Windows revenue declined 1%. That's not huge, but they still DECLINED in windows sales. You know... WINDOWS... one of the two cash cows that Microsoft owns? Microsoft's core business is shrinking. If I help Microsoft stock, I'd be a bit worried. (For what it's worth, I do hold Apple stock, and I'm worried there too, Microsoft's wave has crested, Apple's is at the peak so there's nowhere to go but down, I'm just waiting for the right time to sell, it might be now.)

      But don't let that stop the speculation about how "Microsoft" is doing great.
  • by 140Mandak262Jamuna (970587) on Thursday July 19, 2012 @06:25PM (#40705657) Journal
    No, Microsoft did not bring in less money than it spent. It has decided to wash its hands off of some of the investments it made. It wrote down the value of some of the stuff it owns, and that is shown as a loss.
    • by Anubis IV (1279820) on Thursday July 19, 2012 @06:29PM (#40705707)

      Indeed. They made an investment that didn't pan out several years ago, and now they're writing it off in a lump sum that's hitting them this quarter. That means that the biggest contributor to their quarterly loss was a one-time event that is already over and will not have any bearing on future profits or losses. This is not the proverbial writing on the wall yet.

    • by DragonWriter (970822) on Thursday July 19, 2012 @06:35PM (#40705775)

      No, Microsoft did not bring in less money than it spent. It has decided to wash its hands off of some of the investments it made.

      The second sentence is basically true, but the first is somewhat misleading. Essentially, they recognized that a $6.3 billion purchase of aQuantive that they made (which wasn't counted as an expense at the time, because it was treated as the acquisition of an asset of equal value to the purchase price) was, in fact, almost a pure expense, since the asset they acquired turns out to be pretty much entirely worthless (they took a $6.2 billion writedown against the $6.3 billion purchase.)

      But that writedown is money that was actually spent, its just money that was spent in 2007 and not counted as an expense then.

      • by Mabhatter (126906)

        The real problem is that with their margins, they STILL shouldn't BE ABLE to post a loss.

        This is why people are starting to complain Microsoft is pissing away VAST amounts of money. Their main products, servers, OS, Office, are 80%+ gross profit. That accounts for a large portion of their income. So if those are half their income ($10B), how do they piss away $8 BILLION of gross profit in a year?!

        That's the kind of numbers Balmer is mismanaging.

        Steve Jobs took risks, but with all their riskiest products, Ap

      • Smartest guys (Score:5, Interesting)

        by bill_mcgonigle (4333) * on Friday July 20, 2012 @12:10AM (#40707879) Homepage Journal

        a $6.3 billion purchase of aQuantive

        Seriously - whoever made this deal for aQuantive is a certified genius. That was about 1000x their earnings. People say Amazon investors are absolutely batshit crazy for buying at 187x earnings, and they're not a third-rung company.

  • Ballmer (Score:4, Insightful)

    by twistedcubic (577194) on Thursday July 19, 2012 @06:25PM (#40705659)
    This should be the end of Steve Ballmer's reign. He was a genius at muscling OEMs into screwing over the competition, but now that Windows is so ubiquitous, there's nothing else for him to do but retire.
  • by Anonymous Coward on Thursday July 19, 2012 @06:27PM (#40705675)

    That loss is entirely down to the aQuantive 6.2 billion writedown. As far as analyst estimates are concerned, taking that into account, this is actually a beat. Take a look at after-hours stock price movement. Did MSFT get slammed?

    • by MightyMartian (840721) on Thursday July 19, 2012 @06:36PM (#40705789) Journal

      That loss is entirely down to the aQuantive 6.2 billion writedown. As far as analyst estimates are concerned, taking that into account, this is actually a beat. Take a look at after-hours stock price movement. Did MSFT get slammed?

      No, but in a distant corner of the galaxy, Gronek II, Emperor of the Seventh Moon of Choil, after a tasty breakfast of fried duzelwip, lightly salted wurp jelly and a hot steaming cup of rinok-sphoo, opens up his paper to find out that his most beloved child, the fruit of his loins, the offspring of his brief but tumultuous marriage to Princess Nerb the Six-breasted; Steve Ballmer, has ceased to throw chairs, fuck over Netscape and perform all those other ceremonies one would expect of a scion of the proud house of Choil, and in his greater anger has spat out an orifice-full of hot rinok-sphoo. Before the Sixth Moon of Choil has done its second transit, the invasion fleet will be in place, and Steve Ballmer, once proud Prince of Choil will have to answer for his actions.

    • Re: (Score:3, Insightful)

      by iluvcapra (782887)

      Did MSFT get slammed?

      No, the Street amortized the slamming over the last 12 years. Price on December 31, 1999: $58 3/8s.

  • by Haxagon (2454432) on Thursday July 19, 2012 @06:28PM (#40705685)

    "The loss stems from Microsoft's continued struggles with the online services division."

    That's a flat-out deception! The loss stems from the fact that they made a 6 billion dollar write-off. The summary makes it seem like their online division is just naturally bleeding billions.
    Millions, maybe, but not billions.

    • by DragonWriter (970822) on Thursday July 19, 2012 @06:48PM (#40705891)

      "The loss stems from Microsoft's continued struggles with the online services division."

      That's a flat-out deception!

      No, its not.

      The loss stems from the fact that they made a 6 billion dollar write-off.

      A $6.2 billion write-off against a $6.3 billion dollar purchase of an online advertising firm in 2007 that was intended to be a main engine of profit for their online services division. When you purchase a business for $6.3 billion to reinforce a particular part of your company, and five years later recognize that its only worth $100 million (or less than 1/60th of what you paid for it), its pretty fair to describe as that part of the company as struggling.

      The summary makes it seem like their online division is just naturally bleeding billions.
      Millions, maybe, but not billions.

      Microsoft themselves, in the write-down, is recognizing that $6.2 billion that they spent on their online services division might as well have been piled up as cash and made into the world's largest currency bonfire.

      Bleeding in worthless acquisitions is still bleeding. Some might attempt to distinguish losses from acquisition write-downs from losses from other operations, but with Microsoft -- and many other large firms -- acquisitions are a key and regular part of their operations. If their acquisition strategy is bad and bleeding money, they are bleeding money just as much as if they were losing it from other operations.

      • by shutdown -p now (807394) on Thursday July 19, 2012 @06:53PM (#40705937) Journal

        I think the point is that it's meaningless to look at the loss and say that it's indicative of this quarter being particularly worse than the preceding ones - i.e. that it's a start of a downward trend (which TFS is implying). More accurate representation of this $6B loss would be to spread it evenly over the period since acquisition.

        • I think the point is that it's meaningless to look at the loss and say that it's indicative of this quarter being particularly worse than the preceding ones - i.e. that it's a start of a downward trend (which TFS is implying).

          How do you get the implication of something "particularly worse than the preceding ones" or being the "start of a trend" from the claim that was disputed in TFS -- the claim that the loss stems from continuing struggles in the online services division?

          That actually outright states (n

          • From the title of the article. "First quarterly loss ever" is not particularly important when the loss in question is just an accounting trick to defer and lump together the recognition of a loss that occurred a long time ago in practice.

      • by arth1 (260657)

        A $6.2 billion write-off against a $6.3 billion dollar purchase of an online advertising firm in 2007 that was intended to be a main engine of profit for their online services division. When you purchase a business for $6.3 billion to reinforce a particular part of your company, and five years later recognize that its only worth $100 million (or less than 1/60th of what you paid for it), its pretty fair to describe as that part of the company as struggling.

        This is slightly misleading - they sold off Razorfish from this acquisition for over half a billion, so the value must have been higher.

        Yes. they overpaid. Yes, it was probably based on chummy factor more than value. No, I don't think this marks the beginning to the end. I think Windows 8 will earn that distinction, and even then, it takes a long time for this big a whale to bleed out.

    • by b4dc0d3r (1268512) on Thursday July 19, 2012 @06:49PM (#40705901)

      The summary makes it seem like their online division is just naturally bleeding billions. Millions, maybe, but not billions.

      I agree that it mis-attributed the cause, but they lost 2 billion last year without the write-down, which is plural billion, which is billions. They are bleeding billions.

    • The ad acquisition was intended to help their online businesses, which lost $2 billion in the past year, and is instead a complete write-off. They have several other big bets that could fail, including Bing and their Windows 8 move into mobile. If these fail, there will be more big write-offs.
    • by fermion (181285) on Thursday July 19, 2012 @09:39PM (#40707105) Homepage Journal
      Here is my take on this. One does not have 25 years continuous profits by accidents. One has accountants which manufacture the numbers so that quarterly expectations are meet. So the question is why did they allow a non profitable quarter. It is simply a lack of management. I am not saying that we have an Enron situation in which the profits are fabricated. But I am saying is that there is clearly a breakdown in balancing profit and losses. It could be a laziness that has developed because it has always been easy to balance losses from bad decision from profits due to market monopoly. It could be a deeper issue with lack of control of purchasing and managing expectations of departments.

      In any case a loss is indicative of a problem. We will see if there are more losses in the future, and what this does to the companies expectation.

  • My-my, what a perfect opportunity to analyze the differences between bulls and bears in the 21st century.

    There are definitely those who will say this means the beginning of the end and who will sell, and those who will say this means nothing except a company has reached the maturity to be expected of any stock and that this is the beginning of the beginning and will hold. There are those who this is the first time they ever heard of Microsoft and they will buy because they figure, hell, the price is low, go

  • by Mean Variance (913229) <mean.variance@gmail.com> on Thursday July 19, 2012 @06:31PM (#40705731)

    They wrote down a turd whose asset value wasn't worth what they paid. Look at the cash flows. They continue to generate billions of cash.

    SEC filing [sec.gov]

    • Re: (Score:3, Insightful)

      by Mashiki (184564)

      Yeah. Leave it to the typical MS hate by people here on /. to go apeshit over stuff like this. The story should be modded +1 flamebait.

  • Blood in the Water (Score:5, Insightful)

    by amiga3D (567632) on Thursday July 19, 2012 @06:32PM (#40705739)

    In and of itself this isn't a big deal. They wrote off some bad investments, so what? The problem is that everyone watches MS looking for any sign of weakness. It's more the perception that they don't have it anymore than any reality. I believe this is the beginning of the end, not of MS but of their overwhelming dominance that they've enjoyed for so long.

    • If I were an MS investor, I would take this as a sign that decision making at MS is not very impressive lately. So far they haven't made much progress breaking into online and mobile, and their old cash cows will dry up eventually. Maybe Windows 8 and Surface will be their big breakthrough in mobile, but I doubt it. Windows has a lot of momentum and so MS will probably get several tries at this, but I think they're going to have to make some difficult changes in business model and corporate culture to su
  • by 140Mandak262Jamuna (970587) on Thursday July 19, 2012 @06:41PM (#40705831) Journal

    In addition to its $6.2 billion disaster of a purchase, Microsoft made another critical mistake in 2007: It failed to recognize the debut of Apple's iPhone as the game-changer it turned out to be and missed the launch of the touchscreen revolution. Its partnership with troubled Finnish cell phone company Nokia notwithstanding, Windows phones barely have a toehold in the iOS-Android duopoly.

    It is par for the course for Microsoft to phoo phoo anything new (Remember "640K memory is enough for everyone", "You mean companies are going to print their URLs in their advertisements?" ) and then play catch up. Usually that strategy worked out for Microsoft because corporate computers formed 90% or more of the computing platforms in the world, and it had a stranglehold on that market.

    Two things stymied Microsoft in the cell phone arena. First was obvious: It lacked market dominance for ram through bad but barely adequate competitor and swamp out the competition.

    But there was a second player, that we slashdotter would loathe to give credit to. The much maligned evil phone companies. They are used to getting hefty margins peddling corded and cordless plain old telephone equipment. They saw what happened to the manufacturers of the ubiquitous beige boxes. They were reducing competing purely on price, the brutal price war changed the landscape. In the 1990s the hardware accounted for 95% of the cost of the computer and the software was hardly 5%. While software prices remained stable and went up (MS-Office retailed for $550 when the PCs had fallen below 500$ mark). The telcos were determined to not to let that happen to them. Being incompatible with Microsoft, and not giving it any toehold was the common strategy.

    So even if someone in Microsoft saw the threat of iPhone that company is too big to move nimbly, too bogged down in earlier mode of competing, it had made too many enemies, it has stabbed the back of too many partners and it has scared off too many partners.

    • by real-modo (1460457) on Thursday July 19, 2012 @07:53PM (#40706419)

      Microsoft's problem is exactly that it has bought into this "threat of the iPhone" meme.

      Microsoft and Apple have different markets and different sales channels. By trying to compete with Apple, Microsoft is exchanging a position of dominance in enterprise "productivity" computing for one of abject weakness in consumer/mobile/fashion computing. In so doing, it is alienating its partners and customers even more than usually.

      Sure, enterprise computing is a mature market, and it's not possible to continue double-digit growth in it any more. Big deal. Are electricity utilities reinventing themselves as iOS app developers? No; they are making good money in a static to declining market. That's the mature, high-return, low-risk strategy.

      Microsoft needs to ignore Apple; if it doesn't, lawyers will be getting fat off aggrieved shareholders.

      • by esarjeant (100503)

        I think this is an excellent observation, while it really won't hurt MS to go after the mobile phone market since Windows Mobile wasn't going anywhere - they are about to plunge into a new battle where they are going to sacrifice one of their cash-cows (Windows/Office) to compete with iOS and Android.

        They should focus on the enterprise market, and find ways to compete on iOS/Android without writing another tablet OS.

  • Write off or not the fact is they still lost billions of dollars. And that was due to a very bad business decision.

  • religions all around the world today had a flock of new believers
  • Obviously it's not going to sink the company but it's showing a lot of poor judgement. 6 billion is hardly the chump change most are claiming. How many years did it take for the gaming division to even show a total of 6 billion in profits? The first ten years they seemed unstoppable but the last ten years they seem to be the game that can't shoot straight. The company just feels chaotic like they have no long term plans. I don't like Apple but it still feels like they know their product line for the next 5
  • I realize that this loss is in no way indicative of MS's demise.
    But it still had me thinking about what will happen the day that there is nothing left to do for MS except patent litigation. That won't be pretty.
  • OS/2 is finally winning!
  • by buybuydandavis (644487) on Thursday July 19, 2012 @08:18PM (#40706571)

    Except for a paper write down which only acknowledged a fact of reality established years ago, they made 5.7billion. And that's in anticipation of a big release in the near future, that is probably limiting current sales until the release.

    Buy now.

    It would be interesting to see if they piled on a few other write downs.

  • by melted (227442) on Friday July 20, 2012 @12:04AM (#40707841) Homepage

    Most of you don't know this, but Microsoft gives out bonuses and stock grants in September. This is a good excuse to stiff the employees a bit, and by god they're gonna use it. Being employed by a Microsoft's competitor, I can't help but like this course of events, since we get an influx of resumes from there every October or so, and while most of the people who apply should really be flipping burgers instead, every now and then we do hire a brilliant engineer.

The bogosity meter just pegged.

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