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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.
Aah, but is it profit they are after? Seems to me that when Microsoft gives software away these days it is not so much to hook people, but to keep them from going to Linux.
Are you on crack?
Microsoft can't "remotely deactivate" any version of Windows XP any more than I can reach into your hard drive with my mind and delete your OS. And even if they could, any government with an ounce of programming experience would DISABLE Windows Product Activation through a crack, or even use the Corporate version, which doesn't ask you for it.
Are you trying to imply that all software created in the United States should only be distributed to countries that the US explicitly approves of or something? That's not the way the world works, and that's certainly not the way that I would want MY software handled if I lived in the US.
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
I remember reading about Nestle bringing baby formula to 3rd world countries. "Use this instead of your own breast milk. The succesful and healthy parents in the United States do, so it must be better."
The problems started to show up immediately. First, there was a limited supply, so the parents would try to stretch the formula. Second, there isn't usually a source of purified water in the middle of poverty stricken 3rd world, so they would use water that often had bacteria. 3rd, after using the introductory supply up, they were basically forced to keep using it going forward because the mothers had lost the ability to generate milk.
Nestle made a great profit because there was a high demand, funded through help funds, and also because they generated a captive audience.
I wonder if there will be equivalents here where Microsoft essentially 'addicts' them to using their software while leaving any content expiration intact so they'll be obligated to stick to acquiring new MS things going forward.
Maybe an accountant can answer this question:
How much does Microsoft get to declare as a tax deduction when it donates software?
For example, say Microsoft donates a CD, and that CD cost $1 to manufacture, but it contains software that normally retails for $100.
What does Microsoft get to deduct for their charitable donation? Is it $1? $50? $100?
If it is anything more that $1, then Microsoft is making a profit. In effect, money would be being transferred from other taxpayers to Microsoft.
a "freebie", that is.
Like other posters have pointed out, these third world countries will not be able to affort the hight prices of upgrades. Sure they would take the freebies - it would be smart, but I doubt Microsoft is going to gain the long position.
The dynamic in Microsoft's finances right now is really illustrating a couple of things: (1) market pressures by solutions offered by other (open source) alternatives, and (2) the beginnings of the effects of their predatory reputation and business practices in light of #1.
Software is in may regards (and this is a controversial statement) becoming a commodity. When that happens pricing pressures take hold. Microsoft is entering this phase of its company's life. It can no longer hold onto and expand the market by monopolistic tactics. The open source movement, general awarness and a growing sense of displeasure in the business community with Microsoft's tactics and pricing, and of course the anti-trust trial and verdict (however inadequate we feel the "punishment".
The bottom line is that Microsoft's business success was base partly on its ability to meet customer needs (minus security), but was propped up by its predatory behavior.
I see this trend continuing until Micrsoft's pricing comes in line with upcoming competition (GO LINUX DESKTOP!!!). We are in the middle of a paradigm shift, ladies and gentlemen.
Is the juice worth the sqeeze?
Revenue is not the same thing as profit. Revenue is your gross income. Profit is your net after expenses. If you look at their financial statements and the MD&A you will notice that the decrease in profit is due to "$1.31 billion in stock based compensation expense associated with the employee stock option transfer."
There is no spin here except for your post. If you eliminate the effect of the stock options their expenses as a % of revenue actually decreases.
You somehow relate the fact that Nestle baby formula isn't as good as breast milk to Microsoft donating computer software. Congratulations on the wackiest stretch of an analogy I've ever witnessed.
It's not whacky at all. The principle aim of Nestle's baby-formula scam was that they'd donate just enough formula for the mother's own milk to dry up, after which ... lock-in: unable to produce her own milk, she would be dependent on the formula if she didn't want her baby to starve (pretty likely scenario.)
Fairly appropriate analogy, really.
Corporation, n. An ingenious device for obtaining individual profit without individual responsibility. - Ambrose Bierce
Khomar, you're making the same mistake Marx did. A thing's value is not derived from the costs involved in making it.
Value is totally subjective and unmeasurable. A rough approximation can be made based on market price, but that's somewhat faulty too because the trade medium (money) itself has different value to different people. $100 is is more valuable to someone who earns $20K/year than it is to someone who earns $100k/year.
A ratio of $s/time to earn can be used to more closely approximate comparative value of a thing for models but even so that ignores differences in individual tastes/wants/needs. Basically value can only be measured on individual case by case basis by the individual making the buy/not buy decision.