Microsoft Fights the Flab as it Turns 30

Alain Williams writes "This review of Microsoft, as it enters middle age, looks at it's problems in maintaining growth." Discusses the recent Kai-Fu Lee/Google debacle, as well as things like Apple's iPod.

Comments

Re:Saturated market?

[tomhudson]

Gaming consoles are an area where they have in fact done okay

They've never made a profit from the xbox, and, to quote their 10k filing:

price reductions in the second half of fiscal 2004 related to the late stage of the Xbox lifecycle are expected to lead to lower revenue for the Xbox business.

Microsfots profits are from Windows and Office, and they're both coming under attack as well.

Re:Symptom of FUCKED up investing climate

[cowscows]

Well, there are a couple of ways to make money off of stock. The traditional way is to say, ok, I own a portion of the company, and I get a portion of the profits at regular intervals. These are called dividends, and they're nice.

The other way to make money is by trading stock, basically hoping the price of your shares goes up so that you can sell it for more than you bought it. You can make a whole lot of money really fast this way if everything goes right. You can also lose a whole lot of money too. This is all well and good, but relies on consistent growth.

The problem is that somewhere down the line, dividends ceased to be important to many people, and it's all about growth. Many companies don't even pay dividends anymore, instead just stockpiling all their cash if they make any money. Tech companies are all about this business model. Microsoft only recently paid its first dividends out. Now granted, even if you are receiving income from dividends on stock you own, growth is nice because it should mean more profit, meaning bigger dividends.

So, like you said, it's not really necessary for constant growth to make a stock valuable. But dividends are a longer term investment, so they're unattractive to a lot of people. That being the case, the stock market is basically driven by growth, and the fact that we had a short period of ridiculous growth a few years back still has a lot of people's expectations out of whack.

Granted, in reality, it's more complicated than this, but the biggest problem is just people's mindsets, and the get rich quick mentality. And since all these companies are competing for investor's dollars, they'll play the game however they can. Another factor that's led to accounting scandals.