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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?"
Do you think that sales have also come down due to lack of compelling reasons to switch.
Office 97 as good as 2000/XP/2003 Win 2000 as good as XP 98 fine for home use..
What's the point in switching unless to Linux? Unless you like to donate to Charity through the Bill Gates foundation.
Delays in Windows are only one problem.
Some of the other serious issues Redmond is facing:
1. Worms/spyware/viruses destroying the home market
2. Lack of reasons for further upgrades to Office
3. Enterprise shift to Linux
4. Consolidating competition from IBM & Novell
In general terms, their problems stem from having cornered the market for a product that is almost out of fashion: high-cost, complex (and thus insecure) software. People need low-cost, secure software.
Their best hope is to produce an interim release of Windows 2000 that has been seriously upgraded in terms of security. But even then I don't see how they can survive the commoditization of their core market.
5 years' budget goes awfully quickly when you are used to double-figure growth.
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The real impact for Microsoft will be less revenues and a lower stock price.
You're saying Longhorn is going to be more expensive but for most people Longhorn will be free (pre-installed on their new PC bought at Wallmart) and they won't see the difference...
Don't get me wrong, I use both windows and linux (mepis to be exact), but I fail to see how it is obvious microsoft's userbase is on the decline. Linux is still very much a niche os, almost exclusively among geeks. Even being overly generous about linux as a server os, desktops outnumber by a large number, and those desktops are almost exclusively windows outside of graphic designers (mac), and some developers (linux/unix).
It won't be free, the cost will just be included in the bottom line of the new PC.
I wonder if the price of PC's will go up, or if the OEM licences will be proportionatly cheaper.
Silly rabbit
Microsoft can survive for 10 years without selling even a single product or service. They can survive on the vast Research and Development(R&D) they've built-up over the years. Well, guess what, Bill Gates won't be the richest if they stop selling stuff, and computer industry will be a lot better.
Uhm, so did Apple. And Warner Brothers, and Coke, and, etc...
(ok, so I fed a troll...)
I keep watching them say it's all going to be done right, and from the very beginning I knew they'd do what they'd always do. It's like an addictive disease.
I'd be careful in discounting MS. A wait time of nearly 5 years is the longest, considering they're not exactly rewriting everything and the kernel like NT. Even NT, from scratch, took about 4 years to get done.
This is the time for Linux
I agree it is. But don't short-sight yourself. If your whole selling point relies on that the next version of Windows is absolutely going to contain critical kernel flaws, then something is wrong with your argument.
Everyone is getting sick of Microsoft's incompatibility with standards.
Everyone at Slashdot is. Slashdot is not exactly the online journal of choice for Joe Sixpack. Stop kidding yourself, and understand your competition seriously.
I post this from a Fedora machine, and I love GNOME. But it's sickening to see how dismissive most geeks at slashdot are when it comes to anything about Microsoft. The first rule of war is "Know thy enemy well".
Yea. I know.
Yeah, it sure would be nice to replace the current OS near-monopoly with a full-blown hardware and OS monopoly.
I am terrified to think what will happen if MS actuall gets it right with Longhorn.
We have all, to various extents, been accomplices in MS monopoly 9who has NEVER purchased any MS product?)
We clammor for more scurity and fewer bugs and so forth. What if MS ACTUALLY provided a secure and stable OS? And then people upgraded to it. What then of Linux, OS X, and the like?
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
I find your comments about the cost of XP rather interesting. The XP Home upgrade can be purchased for 99.00 at any retail store. THe pro version is 199.00.
If you fancy yourself a new computer you can get an oem copy of XP PRO fro around 149.00. I am assumming that you are building your computers.
When you look at the cost of software the OS is very very cheap compared to other sofware packages. Symantec wants between 45 and 60 bucks for a virus scanner! So lets be reasonable and say that a hundred or so bucks for an Operating system is a good deal.
Everyone is getting sick of Microsoft
So sick in fact they don't care. Thats right, they don't care. Its just a tool, and Windows is the tool that runs everything.
Users don't turn around and say, "To hell with MS and they're security holes, I'm not gonna put up with DRM." They just don't care, they use the OS that runs software. They need QuickBooks, they want their games, so they use Windows, not because its the best techinical solution, but its the only one.
Before you type again about how every little stumble MS makes is "Linux's time," forget EVERYTHING you know about computers, DRM, DMCA, and just about everything else thats discussed here. Now your not a programmer or an admin, your just an average user. You need QuickBooks, you want to play the latest game, you need Office. You will run only one OS, Windows. Linux and the MacOS will never cross your mind, and if it did the sales person will tell you, I'm sorry no that game or that software only runs on Windows, and you'll put it out of your mind.
So no this little thing is not Linux's time. MS could turn around and call their users all sorts of names and use endless strings of profanity and people will still use Windows. And lastly, even if this did cause MS users to jump ship, it wouldn't be to Linux distros. 'User' distros have tried to make a user-friendly Unix like OS and have been for ages, but Apple beat them too the punch. If people are going to leave Windows, its going to be to the next best supported desktop OS, and thats OS X, not Linux.
"I use a Mac because I'm just better than you are."
And why did you need the virusscanner in the first place ? Or WinZip/backup/defrag/zonealarm/spyware removal/whatever-ware for that matter ?
Symantec wants between 45 and 60 bucks for a virus scanner! So lets be reasonable and say that a hundred or so bucks for an Operating system is a good deal.
Is it really? The irony here is thick. For a hundred bucks you get an OS that will get you 0wned before you can spend the six hours needed patching it over the 'net. You will have to pay for that virus scanner you mentioned to protect you from the OS. Then, by default, you will be running with administrator privileges because many third-party programs won't run otherwise. Given past experience, there probably won't be an upgrade for at least two years.
Contrast that to using Linux-Mandrake as an OS. If you're cheap, you can get it for the price of 'net bandwidth and blank CDs, call it four dollars. For that you get the OS plus hundreds of applications, usually complete with source code. By default, you will be secure, not running as root, and have no need to pay for that antivirus software.
If you want to support the distro (your choice), you can join for sixty dollars a year. In either case, you get two upgrades per year along with upgrades for all the apps as well. So, $100 for an insecure OS that will continually bite you for two years, or $4-60 for a secure OS that offers upgrades every six months including the apps?
A hundred bucks for a PC OS is a rip-off, proven by Microsoft's 80% profit margin. I feel for those people who bought MS's subscription licensing and are getting nothing for it -- then again, maybe they deserved it.
Well would people run an Expensive x86 based OS or a free x86 based OS? Mac hardware isn't that much more expensive then x86 hardware with the same capabilities, and you pay half the cost for OS upgrades between versions. Office runs on the Mac, along with a number of other important pieces of software. On top of that, Mac's look a lot better, which is important to some people. So I would still be shocked, SHOCKED!, (yes, I really mean that shocked), if your average user chose Linux over a Mac.
"I use a Mac because I'm just better than you are."
Does anyone believe the growth rate will remain the same for Microsoft forever? Given one of the biggest areas for future growth was going to be the Asian market, is it any surprise the growth will slow down. Now that China, Japan, and other Asian countries are fighting back to create their own software and markets, Microsoft is fighting a cultural battle. microsoft already owns 90% of the US market, so how in the world can they main the same growth rate as the past? It's simply not possible. The only way to maintain the same growth rates is to target new marktes like consoles, cars and handhelds. Which they are desparately trying, but they aren't making any real progress.
Well if they are so worried about it they could just be like Apple and release a small update every year with some useless features in it I'll never use.
Selling software is all about markups. Even with a good sized and well paid development team, you only need to make a few million before you cover the cost of R&D. Through in marketing, support, training, etc and you've maybe at most doubled (5mil to 10mil lets say). For all software giants, this is probably a drop in the bucket. They probably have their bread and butter products that gross in the hundreds of millions. That's all US owned development. Imagine if 90% of your development was outsourced, you just grow your profit margin even more. But hey, that's just business as usual...
The real rip, as you point out, is the surround support that Windows brings. It takes SO much to get a productive system, and even then you can experience disaster..... here's one scenario I'm sure you or someone you know has been through:
You call up Dell and have a spanky new PC delivered. But, you don't dare plug it into the network because you didn't get the latest virus scanner with it. So you go out, buy the virus scanner, hook everything up and start to surf the web. Assuming that you don't pickup a new virus between when you connect and when your virus scanner updates itself, you are probably 'OK' for a while.
Now of course there are almost no applicatons on your new computer. Minesweep, Word Pad, Paint... bleh. So you go get Office, buy a handful of fun computer games, PhotoShop, Quicken, Turbo Tax and you're finally starting to get use out of your computer.
As time goes on you use your computer as normal. Sometimes it hangs, sometimes a program crashes, but hey that's ok as long as there isn't a blue screen of death. At some point, you start to notice pop-ups. First a couple, then like 4 or 5 whenever you open up IE. Maybe your virus scanner didn't find them! One of your techie friends say that you got 'adware' or 'spyware' or something that's like a virus, but not harmful -- just annoying.
You find something like PestPatrol and download the free version. To your suprise you have 50-100 adware/spyware programs on your computer. Oh wait, you can't clean them unless you pay another 60 for the registered version. You buy it, you clean it, but for some reason things just keep coming back.
As time goes on you probably end up doing 1 of 2 things. First, someone might tell you it's good to reinstall Windows every year or so to "clean things out." Another option is that you just oculdn't get rid of that last virus/adware/spyware. Not being a techie, you find some directions, execute them wrong, and the system won't boot anymore. Tech support (you did get the 3 year warranty right?) says they will have to reload your systme.
Depending on if your re-install was planned or un-planned you might have saved data or not. The worst case scenario is of course that you do your re-install but you are missing all your applications! You downloaded the software instead of getting the CD... You didn't buy the upgrade service, you don't have your old license key, they don't offer the old version, and no discount on the new version....
Moral of the story, Windows seems to be a good way to pay a lot of money for things just to get a system that is actually useful to you. Also, with a system prone to re-installations you open yourself up to upgrade package fees or buying the same software multiple times. This whole scenario could have easiy been a Linux user, but the difference is the availability of free software and initial costs.
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Free your mind.
"MS Sales Growth Limited by Delays in Windows"
I wonder if this could be reworded as
"MS Sales Growth Limited by Development Model"?
Seems logical that, as the OS grows more and more complex, and the same product needs to do more and more (since it's closed source no-one else can offer assistance on the OS level), a single company with developers might not be enough to create an OS.
I think Microsoft is struggling very hard to get Longhorn out reasonably quickly while still having enough features to encourage users to upgrade. It will be very interesting to see where all this goes with, say, the "Windows" two versions later than Longhorn or so... And how quick/efficient open source software development will be then.
Beware: In C++, your friends can see your privates!
This is exactly why Microsoft has hinted before at an intermediate product between XP and Longhorn. It's not to provide customers with a better product while they are waiting, it's a form of Microsoft "passing the hat". Have we seen this behavior before? Think Windows 98, Windows SE, Windows ME. Did SE and ME provide anything sigificant to provide us with anything significant to put us in a position of XP? No. Did it provide Microsoft with anything? You bet. Pull together some early code, test it for compatibility with Win98, burn some CDs, push it onto the market, and all of the casual users run to BestBuy to keep their PCs up to date.
Microsoft doesn't have a need to keep the shareholders happy, simply because there are very few outside an inner-circle within Microsoft (clumsy, but accurate). Remember: Microsoft hasn't|doesn't pay dividends, hence their cash reserve (warchest) in excess of $40B.(for those who doubt divdends are paid, I suggest you spend a few minutes of research. Some key words to help you in your search: "Microsoft stock Nader dividend". Nader is only involved after Microsoft failed to pay dividends for a long, long time and he tried to leverage them (so far, unsuccessfully). Basically, adding his name to the search helps to reduce the size of your search because without it, you'll get far too many hits and will be stuck with wading through them. Stock & owership are one thing when it comes to things such as purchasing another company or just plain leveraging, but when it comes down to hard, cold cash, little can be done to compete, hence Microsoft's true power.
I'm a bit skeptical about your figure of four years for Microsoft to produce Windows NT. If I recall correctly, Microsoft hired a bunch of engineers away from DEC, who then created Windows NT from some IP and code that Microsoft had left over from their collaboration with IBM on OS/2.
That was my point. The 90s being the exuberant decade(everyone is going to get rich doing each others laundry, ie, the stock bubble), people who had never gone into personal computing went out and got one, at huge cost for the time, a brand new major appliance expense, equivalent historically to-say-electric refigeration talking over from ice boxes in terms of advances,or TVs replacing radios in the 50's, in terms of tech complexity, and totally new cost to be added to the family budget. It had to be squeezed in somehow, and the euberance part was the tipping over point, when the decision was made and that sweet spot of around 1200$ was hit for a decent desktop, people didn't want to get "left behind". They saw references to dot com this and that, people were asking for their email addy, etc, so they had to, consumerism pressures.
The rest is as you say, and what I said, it's good enough now, there's very little need (VERY broadly speaking)to upgrade either hardware or software OS, either on the personal desktop or in office-type business. Really, the only practical need is more RAM on most machines, and firewalls and antivus softwares. Hence, slumping sales, dropping prices, etc.. the industry could have dropped prices earlier, but they still had huge untapped market, so they kept profits up, which further exasperated the market exuberance,they believed their own hype, went nuts, it was a false profit potential that got projected beyond a reasonable level of maintainance, it couldn't be sustained, so prices dropped as the newer assemblers and vendors hit the markets, by-passing a lot of the mainstream vendors,in other words, the rise of the whitebox and the local mom and pop and getting boxes in regular department stores really helped bust the bubble.
Then the horror stories sunk in, viruses, patches, viruses, patches, crashes, etc. The machines kept working *sorta well enough* obviously, but by now, 2004, folks are leery, they is no native trust like there was even 6 years ago, they don't swallow the marketspeak, they got sophisticated in their lookings. People aren't that stupid, they learn from getting burned, and are holding out now for uber cheap almost free hardware before going forward again. it has to be orders of magnitude like 4 times better for 1/4 the cost, or something like that, before they will consider it, and they assume the OS is just free, no desire to go pay 1/2 or 3/4ths of what a new basic entry level pc costs at a whitebox shop for a disk in a wrapper on the shelf, when that new peecee has an OS on it anyway.
Frankly, OSes are not worth 100$, or 189$ now, they are worth like 10-20 bucks, tops, what an entertainment cd or dvd costs, because that's all it is, bits and bytes on a disk. That's the only rational OS market level left, for in the future, IMO. Even server OS will go that route, inevitable, it's becoming almost common place for google and the admin you are paying already to be "the support infrastructure" of note.
It's a freaking piece of plastic, people can see that. What past market prices were reflected ultra new, emphasis on sparkling, new, and improved, now it's just mostly new, and only very slightly improved,and not worth any major expense really.
I don't know the stats, but I would guess (really is a guess I'll admit) XP installs are 90% or better OEM sale with new boxes, not people going out to upgrade their older boxes on purpose "just because" its new and shiny and sitting on the shelf.
Um, work on NT started in around 87, first release in 93. That's six years. First useable release wasn't until late 94.
Not that I think there's anything wrong with that, I think the idea that you should get a major version iteration every year or so is absurd. If the OS is so poorly written that it takes a major version to handle things that arisen in the past year then you've got a real problem.
this is getting old and so are you
blog
Several years ago I read an article asserting that Microsoft was essentially behaving like a middle-aged adult hanging onto adolescence. This article might have been on the Motley Fool site, I forget. The gist of it was this:
Companies typically innovate and take huge risks when they are young, because they have to in order to survive against their entrenched competition. Once a company becomes profitable and has a solid product line, it goes into the very different mode of repeating what it already knows how to do and improving itself. The focus is then on expanding market share, improving efficiency, making better financial deals and so forth. A company that succeeds at this phase accumulates a store of cash and starts focusing on things like mergers and acquisitions. By this time a company has evolved a complex management structure and a lot of rules and processes, which make everything the company does slower and more deliberate than before. These mature companies are much better at investing in other companies and leaving them to do the actual innovation.
Microsoft, the article said, had already entered the mature stage and yet was still trying to act like a startup. That was a couple years ago. Today I think we are seeing this view of Microsoft vindicated. Anything it does now is on a much vaster scale than when Windows 3.0 was released in 1990. Every big release now involves thousands of developers and millions of customers around the world. With a multi-year release cycle, Microsoft can't possibly respond to the market; they can only try to dictate to it. Everything they release was planned several years ago.
The statement that Microsoft has enough money to survive 5 years without any sales is an interesting bit of arithmetic, but that scenario is never going to happen. MS is a public company with thousands of stockholders, many of them large financial institutions. If Ballmer announced that Longhorn won't be ready until 2009 and will cost $30 billion, I doubt that the stockholders would let him or the existing board stay in place. There might even be talk of using that cash to buy a whole bunch of other companies and move away from doing actual development. Not that there's anything wrong with that. It would just mean Microsoft was finally acting its age.