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MS Sales Growth Limited by Delays in Windows
Alien54 writes "As reported by Bloomberg, Microsoft Corp.'s sales growth will probably drop below 10 percent next fiscal year for the first time because delays in the next version of Windows have created the longest-ever lag between releases of the software. They go into some detail on how the lack of new products also hurts multiyear subscriptions, because clients that buy the contracts expecting to get product upgrades may not renew if new items won't be available for a while. Didn't someone say once that they have enough reserves to last 5 years without any sales at all?"
Microsoft's cash reserves as of Dec 31, were 53 billion dollars. To put that into perspective, it is enough to "fund NASA for a year, assemble a fleet of 100 Boeing 747s, and buy every person in Seattle a 2004 Subaru Outback -- with a few billion left over for incidentals."
Math:
I am posting anonymously for obvious reasons.
I can safely tell you to expect a "SE" version of Windows XP by December of this year. It will have some enhancements and adjustments, plus it will also have a new media center-like program included.
Expect an announcement in the next two or three weeks.
The price of Windows has very little to do with the cost of developing it. The OS division has annual profits of about 85%. And of that last 15%, most of it is marketing, support, and manufacturing, not r&d. They are already charging what the market will bear, and since the operating system is a natural monopoly this is far beyond the production cost.
Microsoft is currently threatened by a barrage of minor issues which add up to something serious when combined.
.Net and reasonably fast, preventing their newest system from completely stealing Sun's thunder. Once again, damaging credibility.
.Net, the X-Box, and WMA with DRM. MS-Office and Windows are still their biggest products, but they can't increase in sales very much.
.Net is that, as it has very much promise and says something about how much total change will come with their next OS release. Also, .Net can compete with Java somewhat, helping them in a buzzword cattle.
1) Lack of new products prevents sales and damages customer loyalty.
2) Severe worms damage customer loyalty, increase costs in maintenance and customer service.
3) Competing products getting stronger with OS-X on the desktop on Linux both embedded and in servers cut into what sales they would have.
4) Strong competition generates press for opposing sides, making them appear less innovative than they want to.
5) Constant lawsuits present a steady sapping on resources.
6) Constant web-popups make IE seem sad in comparison to Firebird and Opera, as well as a lack of features being painful. This detracts from their general appearance and aids competitors.
7) More people are satisfied with their current systems and are just refusing to upgrade.
8) Piracy of windows is staying widespread despite product registration, and the lack of legitimate copies is adding to the virus issue.
9) The next version of Java is looking stronger than
10) Although X-Box started gaining on the other consoles finally, all the competing systems are starting to push even more for handhelds, and likely integration between the two, resulting in an aspect where the X-Box will be lacking.
11) The G5 chip is the first time that a Macintosh processor has been seen as competitive with the top Intel chips, further undermining their superiority.
12) The iTunes music store is still unrivaled, re-solidifying Macintosh as the OS for multimedia, along with programs such as FinalCut and Garage Band and products such as the iPod.
13) Governments are starting to strongly consider open standard, raising the lobbying costs for Microsoft and potentially requiring some new file formats to be supported by them.
14) OpenOffice.org shows a technically capable alternative to MS-Office. Where MS-Office was once clearly on top it may have to start fighting for its place soon. Also, the latest version of MS-Office, MS-Office XP, doesn't run on as old of hardware as OpenOffice.org, so many people with old Windows systems have an alternative upgrade line, as opposed to being locked into upgrading computer, OS, and office suite all at once.
15) Many large contracts for Linux have been seen recently, harming Microsoft's public image more.
There is other stuff, but I can't think of it at the moment.
I would say their strongest pieces at the moment for increasing sales are
Their OS is just not going to be ready before 2006, so it cannot stimulate a recovery. What they need is something to make it worth the wait.
MS-Office was traditionally their big seller to tie people into their systems, but it's basically finished up. They have very little room to improve. Most of the improvements that could be of value cost more to develop than they will bring in sales (better type-setting control and similar advanced features) or will have a huge risk of damaging their current monopoly (a new office suite can have a radically new UI and be easier to use without losing customers).
X-Box, on the other hand, is totally up-and-coming and is technically superior to the competition. If they can get the X-Box2 out in a timely manner, they can get press about being innovative, they can get a rush of sales from nowhere, and they can stimulate their gaming division, giving them a third strong arm to thei
I can't find any solid evidence for a decline.
Microsoft Sells 210 Million Copies of Windows XP The number mostly based on new OEM system installs, currently running about 10 million a month, up from 9 million a month last July. Figure in corporate licensing, academic distributions, etc., and the number of legit, licensed, XP installs alone must be over 300-350 million.
The Google Zeitgeist tells much the same story, 90% all queries to Google come from systems running Windows, 47% from systems running XP. Not a bad showing for a three year old O/S.
Despite all their service packs and hot fixes, they never really seem to FIX anything. Besides 'Doze itself there are a bunch of MS products I've used over the years that had serious problems. Not necessarily "bugs" per se, but features that didn't work as advertised or missing functionality in general.
Case in point: VS.NET 2003 has several annoying bugs and problems that have been the subject of hundreds if not thousands of complaints. It's been out a while now and there's no service pack in sight. Maybe half a dozen features from VS6 were "removed". Sure, they added a hundred, but those 6 were commonly used and their disappearance causes angst and frustration on a daily basis. What's the MS response to all this? "Wait for Whidbey."
Right. That's just been delayed again. And they want you to pay for it, of course. Why can't they just friggin' fix the garbage they've put out already? There are countless similar examples over the years. Access, Word, SQL Server... you name it and it has had bugs at some point that MS refused to fix. They say to wait for the next version, but that doesn't address the core issue that you have a piece of expensive software you already paid good money for and they refuse to fix it. They refuse responsibility to make it work right. Perhaps, at some point, software should have warranties if it costs beyond $X. I'm sick and tired of paying for MS software that they essentially sell "as is".
This doesn't even begin to address the notorious problems they have with security. I think they're related. It goes to their culture of never having to fix anything. The recent years of being forced to patch holes and vulnerabilities goes against everything in their culture. That's why they can never get the security fixes "right".