Microsoft profits down again for Q4?

What figures will Microsoft release next Thursday?  Will they (as some suggest) continue to show a decline....Is the Redmond company heading for a flatline?  Who knows what the future holds, but for those with no financial interest in Microsoft it makes for fasinating viewing!
What figures will Microsoft release next Thursday? Will they (as some suggest) continue to show a decline....Is the Redmond company heading for a flatline? Who knows what the future holds, but for those with no financial interest in Microsoft it makes for fasinating viewing!

It is being reported that Microsoft’s figures for Q4 that are due to be posted next Thursday are expected to be down, again.  The recession has hit PC manufacturers hard and in my opinion this has had a direct impact on the OEM sales for the Microsoft platform.  Whilst Bing is yet to achieve the Google beating dominance that some MS faithful are claiming, Zune failing to challenge the Ipod (IMO) and Nintendo having such a huge hit with its WII, one can be forgiven for thinking where is money to be made for the Redmond company?

For more insight, visit: http://online.wsj.com/article/BT-CO-20090717-711707.html

How about MS Office?  Well we have already seen the rise in popularity of Open Office which I believe many users are finding meets their needs, doesn’t cost anything and doesn’t have the restrictions of license that Microsoft’s offering has.  We also have to keep in mind Microsofts move to release the E version of Windows 7 in anticipation of an EU ruling on anti-trust.  Firefox appears to continue eating away at the IE userbase amidst stories/allegations that IE6 changed the default search engine to Bing without the users consent.

So what does Microsoft have to look forward to?  With Windows 7 looming on the horizon all should be well and if it wasn’t for Google’s news of their new operating system due for release middle of next year (and I believe sending up the price of Google shares) then I believe Ballmer and crew could have enjoyed the summer…..

Whats the future for Microsoft?  Who knows, but it will be very interesting watching the struggle as a FOSS observer.

Goblin – bytes4free@googlemail.com

8 Comments Add yours

  1. Chips B Malroy says:

    Microsoft: Citing Worries On Windows, Argus Says “Sell”

    http://blogs.barrons.com/techtraderdaily/2009/07/16/microsoft-citing-worries-on-windows-argus-says-sell/

    And interesting article on what going happen in Q4, and beyond. Which further strengthens your article.

    1. Will says:

      Just skimmed the article. Found it amusing that in the comments, a few pro-MS posters were criticizing Google’s Chrome OS as being “vaporware”. While that may be true for now, how long ago did Microsoft start bombarding us with Windows 7 propaganda, even though the OS is still a few months away from release? Double standards much?

  2. Chips B Malroy says:

    Hey Goblin,
    Now that the Q4 figures are out for MS, was going speculate on what some of the figures actually mean. If I read correctly a 30% decline from last year, it could have been far worse for MS. As MS played up the fact that it made 750 million in cost savings by discontinuing products/projects and 5000 employees plus unknown numbers of contractors. Is it possible that figure could have been 55% if MS had not taken these extreme measures?

    Also, here is an interesting article from cnet:
    Apple owns the premium PC market at U.S. retail
    http://news.cnet.com/8301-13579_3-10293876-37.html

    A quote from the above link:
    “According to NPD, 91 percent of all computers sold at retail for more than $1,000 were Macs. That marked a slight increase from the 88 percent in May. But Apple officially owns that market, and it appears the price cuts across its MacBook Pro lineup introduced in early June helped. On Tuesday, Apple announced that it sold 13 percent more Macs during April, May, and June of this year than the same period a year ago, despite the recession and price-conscious consumers.”

    Since I live in the USA, I actually know 3 people who have gone from MS Windows computers, to go out and buy Mac laptops. The reason they give me is they were looking for something “secure and stable,” which they had decided Windows wasn’t. One in fact, stated that one day the XP computer would not boot up, and thats when the Mac was purchased.

    Most likely the Laptop Hunters commercials are not effective, at least for now here in the USA. Goblin, do you know of many Mac users over there? If so, ask them why they changed to Mac from Windows? Bet you get the same answers I did. BTW, I am not a MAC user.

    But on to the point, which was released in the MS Q4, that the premium mix is now 59%. What this means is MS is selling a whole lot less of its premo Windows, and mostly the lower cost Windows is selling. Why is this, its because its being sold on cheaper computers, and because of Netbooks with XP Home on them.

    Because consumers are now voting with their money, by buying cheap computers only with windows, this is long term affecting profits at MS. Of course, MS could fix the security and stability problems, that would help get some of its customers from moving.

  3. openbytes says:

    MAC’s seem popular within my circle of friends, my wife also has one, although to be fair I have had very little to do with them.

    Microsoft have yet to face a possible EU fine and I always maintain that in my opinion Microsoft’s single biggest mistake was Vista. Can you imagine the 7 buzz if Vista had never been released?

    I think the mainstream users are mostly indifferent to the release of 7 which IMO is the “hero” that Microsoft is holding out for. Problem being in times of economic crisis they are competing with what appears to be a popular Apple and also FOSS.

    I will continue to stand by my comment that in years to come, history books will reveal that Vista was the turning point in Microsofts fortunes (to the detriment of) (IMO)

    I am looking forward to reading over Apple results as I believe that it will make the MS comments over their losses look a little silly.

    Microsoft (IMO) needs to get its fingers out of the many pies it has them in. I believe Microsoft needs to accept that others can and will do things better than them. I think Microsoft needs to concentrate on a smaller product range, but more importantly (IMO) I think that Microsoft needs to stop throwing money at ideas in the hope they will “strike it lucky”

    Its long been my opinion that Microsoft cannot stand the thought of anyone else doing anything better than them.

    MS Contributing code to Linux is an admition (IMO) that they see Linux as being important and want to be part of it. Unfortunately (IMO) the smell of past allegations follows them (like the legend of Vista) and if we look to the Linux community I don’t see Microsoft being warmly received by users who in many cases (IMO) shifted to Linux because they were fed up with Microsoft.

  4. Chips B Malroy says:

    Perception is everything, especially with MS. Notice that MS withholds revenue for the pre sales of Windows Seven from this quarter, and they intend to also withhold those from the next quarter. MS will try to add that revenue all at once, in a quarter that rebounds, to show that MS has also rebounded. Some have called this fudging the numbers a bit.

    MS has a plan to raise more money from those purchasing cheaper laptops, where the market now has gone in mature markets. MS has dropped Seven Basic in mature markets (formerly Vista Basic) in favor of Seven Home Premium, which it charges more for. The Starter Edition, still gets a price greater than XP Home Edition. Somehow I doubt that Seven Home Premium is going run well on most Netbooks, and certainly its going to affect the bottom line on those Netbooks, to the point that some with it will not sell as well. Most likely this MS strategy will fail, and it will continue to have to almost give away XP Home to kept Linux off Intel based Netbooks in Mature markets such as the USA.

    While Net Applications is not a reliable source of desktop use, it would suggest that at least in the USA, that Windows desktop use has lost more than 7 percent in the last 3 to 4 years, mostly since the release of Vista. When the economy does come out of recession, MS will most likely never completely regain the income they once had. For several reasons, 1. They cannot compete with Mac on $1000 plus laptops, they have lost this market now in Mature countries. Which means that MS Windows is now selling more of the cheaper versions of Windows, and the mix is costing them. 2. Giving away or charging very little for XP Home, to kept Linux out of the mature markets, is also driving down the mix and profits of MS. 3. It won’t matter much longer that MS gives away XP Home on Intel Netbooks, as ARM Netbooks will be coming with Linux and Google. This can fundamentally change the market, and be the hole in the Dam that MS cannot plug this time. ARM, if successful, will greatly impact MS profits.

    Windows Seven when released will get about the same bounce as Vista did. It doesn’t matter how much better than Vista Seven is really. What matters is how much better Seven is to XP, because that is what MS has to overcome, and there its likely to fail. Users do not buy a new computer to replace the OS, they buy them to replace an old computer, or one that does not work anymore. Expect Seven to follow the same adoption rate as Vista did. And since MS has said the next two quarters are expected to be the same as this one, its safe to read between the lines, and say that MS isn’t expecting Windows Seven be adopted much faster either. Also, this is a terrible time to release and try to sell an OS in the middle of the worst recession on record.

  5. Chips B Malroy says:

    I also have to add that most likely, MS will be fined heavily by the EU for bundling IE, and for its role in Office formats (ISO etc.). The fines will affect MS bottom line one would expect, unless they turn out to be lite. MS stock is long term sell. While MS is now a company on the decline, it had almost the entire market at one point, so it has a long way to fall ahead of it.

  6. openbytes says:

    Yes agreed.

    I was having a discussion on COLA that Linux is on the shelves (in magazines) almost now dominating the general computing (certainly in my local WHSmiths) I think thats a sign that if MS wanted to stiffle competition, the “cat is already out of the bag” and ontop of the EU fine, they now have to compete in a price war against…..free.(IMO)

    Maybe MS could apply to the Gates foundation for help?

    Regards
    Goblin.

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