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Microsoft Revenue Up, Tries to Hook Third World
rocketjam writes "Microsoft reported record revenue for the last quarter Thursday due to increased sales of personal computers. Analysts were impressed with the company's overall performance, however they expressed concern about the continuing drop in unearned revenue, reflecting Microsoft's difficulty in signing up customers for long-term, sustainable business contracts. The $400 million drop in unearned revenue was less than the drop in the last quarter but still exceeded many analyst's expectations. The company's continuing problem in gaining long-term contracts is generally attributed to growing security concerns among customers and company's unwillingness to go along with Microsoft's 'Software Assurance' upgrade subscription plan." Also in the news: Microsoft is donating a pile of software to the United Nations -- retail value, $1 billion; wholesale value, maybe $1 million or so -- attempting to hook the Third World on Microsoft software.
Mikey adds "
Do you have any real data to back this up, Michael, or is this yet another of your unnecessary and unwanted biased editorials? Not that I'm in the pro-Microsoft camp but a 1000-to-1 profit line sounds pretty high. This is shoddy "journalism".
Feel free to bitch slap me and any subsequent thread.
Trolling is a art,
Microsoft would donate cash and the latest versions of its software, but the centers were free to expand with other software, including open source software such as Linux, Gates said.
"They'll be adding software from other providers. There's no exclusivity," he said. "Our role is to bring software that is quite popular, and happens to be ours."
Mod me down if you must, but I applaud Microsoft for this. While Linux or other open source OS use is definitely on the rise throughout the world, Windows is still the primary desktop of the business world, and this should indeed help people to enhance their skills and thus their marketability. You might say that they could potentially become "hooked" to Microsoft software, but again, there's no clause that limits them to using it, so I can only see this helping people. Bravo.
It's better to vote for what you want and not get it than to vote for what you don't want and get it.
- E. Debs
That probably is their "marginal cost". Look that one up in a Finance book.
attempting to hook the Third World on Microsoft software
While I'm an avid Linux fan, why do I get the feeling that if a large Linux distributor like Red Hat arranged for a glut of software to be sent to UN countries, the headline would have been slightly more flattering? Something like "generously supplied Third World coutries with Linux software" instead of the negative connotations implied with "hook" that is attached to Microsoft's gesture.
"In the news today, something good happened to Microsoft. However, we at OSDN feel we must say something bad about them, so as not to focus less on the positive, more on the negative. Thank you for nodding your head."
I can't see that it really matters if Microsoft tries to "hook" the Third World on their products. The Third World can't _afford_ Microsoft prices (sort of what makes them Third World) and so if they are using Microsoft products it will be at no gain to the company's bottom line.
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...is because they KNOW they have bad publicity. I dont think they expect to make a whole lot out of this market. But, it will help to make them look like the good guys.
Just my humble opinion,
SirLantos
The flying hamster of DOOM rains coconuts on your pitiful city.
Not neccisarily. During the 90's MS knew that software priacy in China (real copy/sell piracy not ??AA piracy...)was big in China, but they let it happen because they the Chinese would get 'hooked' and MS products and then MS could really turn the screws and milk them. Drug dealer tactics. The first one is always free.
My days of not taking you seriously are certainly coming to a middle...
Which is it, MS is evil because they charge too much in third world countries or MS is evil because they gave away software to third world countries? Can somebody please explain this to me? MS has done plenty of things to rank as evil in my book, but this is ludicrous.
Yes, but there are a few benefits to this:
1) They have a chance to get in on the ground floor in those countries. If all the people there are used to using MS software, guess what they'll keep using if/when the economy starts to get going?
2) It pushes the numbers of people using Windows up, which is what a lot of PHBs look at. "Why would we switch over to Linux when 99% of the world uses Windows?!"
3) Tax write-off.
4) Looks good to consumers - "Wow, they're so generous!"
5) Maybe MS just felt like being nice. There's no exclusivity agreement, so even if the people there take the free software, there's nothing stopping them from using alternative software if they feel like it. Pretty cool of MS.
You don't really lose money on a sale you don't make -- unless you're using **AA style accounting methods, that is. Someone in a 3rd world country running a pirate version of MSWindows for example because they can't afford to buy a retail version doesn't take money out of Microsoft's pocket. They could be running Linux instead, and it still wouldn't be an actual loss for Microsoft. It would just be one less sale against profits.
Instead I see this as:
a) A big PR move for MS (MS gives $billion to the poor)
b) Tax write off
c) An attempt to displace non-MS OS's in regions where MS cannot otherwise compete.
All of the above benefits MS at a very cheap cost to them.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
A friend of my put it best ..
"In other news, crack dealers give first hit of crack for free to kids"
[alk]
Read the statements again. 3 month income is down, year over year.
Microsoft is trying to spin this as improved results, but they are just playing a shell game. Note that the increase revenue is more than balanced by increased expenses. Translation: Microsoft is buying sales and hiding the costs. Translation of the translation: Microsoft is being forced to offer heavy incentives to move their tired old products. Translation of the translation of the translation: a million Penguin bites really do hurt.
When all you have is a hammer, every problem starts to look like a thumb.
According to their Annual Reports MD&A they make a profit in Client (Desktop OS), Server, and Information Worker (Office, Visio, etc.). They lost money on Business Solutions (Great Plains Acct Software, etc.), MSN, Mobile and Embedded, Home Entertainment (XBox, etc.), and Other (which had something to do with the sale of Expedia).
Interestingly enough the server sales (which is where is and can do the most damager) is not that big a part of their income. Windows (for the desktop) and Office and really their moneymakers (and probably will be for quite some time.
Presumably the people getting this free software are exactly the people who might be looking at free software as a cheap alternative to MS.
Giving them free stuff therefore loses MS very little in sales, but ensures they are all gaining experience and expertise in MS not Linux etc. So when they do have the money to spend on software, they will do so with Microsoft.
Please correct me if I'm wrong, but: The desktop OS/Office Software market is not your typical 2-3 major-player market. Microsoft is a convicted monopolist with over 90% market share. This is not an offer of help, this is a predatory offer to stop 3rd world countries from adopting Open Source Software.
Michael didn't say "from a manufacturing perspective." What he said was pure flamebait: "$1 billion retail, probably about $1 million wholesale." Please.
Or McDondald's who gives you a free burger. Or iTunes giving away a million songs for free. Or netflix giving you one free month of rentals. Or Columbia House giving you 10 CD's for a penny. Or AOL giving you a zillion free hours. I think I've discovered something. Drug dealers actually operate like other businesses. Of course in my life time I've never acutally been offered free drugs. The supply is much lower than the demand, the dealers have no problem moving their stuff without giving any away.
Jack Valenti and Orrin Hatch will be first up against the wall when the revolution comes.
That's a vast overstatement that ignores what's going on in IT.
There's basically three trends that I see:
1) We don't need Licensing 6 - we'll just stay at Year 2000 level products for a few more years (VERY common in the current cost-cutting environment and would not preclude a move to Longhorn or whatever)
2) Wait and see if the Linux desktop improves (which doesn't solve any of the compatibility issues)
3) Actively moving towards Linux by rewriting apps and so on (not happening very frequently because it requires spending MORE money in the short term)
Also, Licensing 6 wasn't necessarily lower-cost. It's primary appeal was to orgs that may not have had all of their certificates in order and didn't want to get audited.
I can't see that it really matters if Microsoft tries to "hook" the Third World on their products. The Third World can't _afford_ Microsoft prices (sort of what makes them Third World) and so if they are using Microsoft products it will be at no gain to the company's bottom line.
You seem to have completely missed the finer points of monopoly versus normal competition. The very last thing you want as a monopoly is a competitive alternative. Read up on some basic economics about profits in monopoly versus duopoly and how much money it's rational to sink into barriers to entry.
Microsoft would want nothing but for the third world to use their products, both officially (like this giveaway) and unofficially through piracy, because it means they're not using anything else. While they may cry their hearts out over the massive piracy, the truth is that if they actually forced them to pay, they'd lose their biggest barrier to entry.
You're right, the third world doesn't gain their bottom line. But if they let an alternative develop and grow popular because their prices are too high, it could seriously hurt their bottom line where it matters - in the rich countries. That's what this is all about, what they are trying to prevent.
That's also why threats of moving to Linux is so effective - the more people are on Linux, the more the rest can threaten to move to Linux. So it's probably cheaper to buy them off than to increase the Linux userbase and make the switchover threat worse. They sacrifice a little profit to keep their monopoly, because that is what matters in the greater picture.
Kjella
Live today, because you never know what tomorrow brings
I can't see Microsoft ever making any significant profit there.
You are probably right, since their is no money to be made there then by giving away licenses, they are not loosing the money that they would never get anyway. In addition, by getting people on windows they are keeping people off alternatives.
Microsoft is obviously doing this just to hook the third world. Its not like they, nor Bill Gates have ever made any charitable donations before, right?
Maybe one day slashdot will get rid of Michael and will slowly become a respectable news source again.
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If you like, I'll give you $1000 worth of software - it's easy because I can arbitrarily set the "value" of a trivial chunk of code at $1000 and be no different that what Microsoft is doing here. This is why Microsoft likes to donate software or vouchers for software (most which usually come back to them) instead of cash.
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I have re-posted this AC comment because it needs to be seen, and someone has modded it down unfairly.
Free software gives Microsoft a lot of exposure. Some of the worlds largest markets (read: most populous nations) are third world. Since people will have the product, they'll learn it, and likely develop the same dependance as is seen in North America today. (Ever try to use Lotus Suite after 6 years on MS Office?)
Eventually, the economy in these nations picks up, and people start paying massive amounts of money for software upgrades and support agreements.
Good long term potential earnings.
The people who run this web site are not journalists by any stretch of the imagination. They never were, and they never will be. The only one to come remotely close to that description was Katz, but he was so far gone to the left that it didn't matter.
I agree with what you're saying, but I cringe whenever someone accuses them of "shoddy journalism" - that's an insult to real journalists everywhere. Instead, they should be criticized for running a web site that unfortunately commands the attention of millions of people all over the world and knowingly appending their snippy comments to stories submitted by other people in order to sway the opinion of said millions (ok, maybe thousands).
Being a "perl hacker" (whatever the hell that means) and hitting the jackpot by accident does not make you a journalist anymore thatn learning to hack a weird scripting language makes you a professional software developer.
Maybe you should revisit your Eco101 textbooks here. I mean, it doesn't get any more ridiculous than this.
If you like, I'll give you $1000 worth of software - it's easy because I can arbitrarily set the "value" of a trivial chunk of code at $1000 and be no different that what Microsoft is doing here.
Perhaps you should stop buying consumer goods. Or do you also complain when you buy a shirt at JCPenney for $30 that actually cost $2.5 to make in some sweatshop in Thailand?
Whatever price is set on a consumer good is exactly what the market will bear. No more and no less. You are obviously not representative of said market, so stop pretending that you are in order to give your arguments an air of informed validity.
Microsoft is obviously doing this just to hook the third world. Its not like they, nor Bill Gates have ever made any charitable donations before, right?
Donating cold, hard cash is charity.
Donating product is promotion, pure and simple.
Spinning it as "charity" is disningenuous, dishonest, and quite frankly an insult to our intelligence (not to mention an insult to everyone who does make real, legitimate financial donations anywhere).
Maybe one day slashdot will get rid of Michael and will slowly become a respectable news source again.
So, in other words, Michael isn't up to Microsoft Shill standards?
Microsoft is trying to "hook" the third world. As anyone with any experience with computers (who is not a Microsoft shill) will attest: once you are running on one platform, switching to another is difficult even if the playing field is level. Add to that Microsoft's long, well documented history of customer-lock-in strategies and techniques ranging from deliberate sabatoge of competitor's products through mucking with DLLs (Netscape, DR DOS, etc.) to outright strong-arm tactics ("use Netscape instead of IE and will treble the price of your licenses!"), couple all of that with Microsoft's typical monopolistic pricing, and the only rational conclusion anyone not shilling for Microsoft could reasonably reach is that they are, in fact, trying to promote their product in the third world and thereby lock in new customers, making it difficult for them to consider competing alternatives (e.g. FreeBSD, Apple, Linux).
In the Common Tongue we call that "hooking" the customer.
The Future of Human Evolution: Autonomy
If they write off $100, they have to show that the software was worth $100. If they show that the software was worth $100, they have to pay taxes on $99 of capitol gain. They can then write off the $100 and get a net writeoff of $1.
-no broken link
I suspect that this is a spoiler for Open Source like OpenOffice, Apache and the likes of FreeBSD or GNU/Linux.
If its basic computer skills then you don't need any Microsoft software but any old PC like the junk we in the 3rd world typically toss out (you know all those P-300 and lower PCs.
I want to know is
a) what the hell they would be powering these PCs with ! and
b) how will Microsoft actually help the very poor rates of literacy in the females in Afganistan. Since the US got rid of the Taliban very little has been done to help female literacy. Female literacy is an essential part of the general children literacy rates as the females of the family teach children from an early age at home basic skills prior to formal schooling.
I still think that the 3rd world need the basics to survive not some 3rd rate software that has an inflated sticker price and can easily be replaced by alternatives at a zero price point. Anyone who thinks that GNOME/KDE is not desktop ready is talking sh*t. As for server technology then any typical Linux magazine cover CD has Apache, PHP, Perl, Linux, Postgresq/MySQL, Python.... You can get more software from some old Linux magazine at a newspaper stand than you'll ever get from Microsoft on their gift programs.