Netbooks Take a Bite Out of Windows Profits

twitter writes "Analysts at Bloomberg noticed the tumble in Microsoft's traditional software sales last quarter and blamed it on netbooks: 'The devices, which usually cost less than $500, are the fastest-growing segment of the personal-computer industry — a trend that's eating into Microsoft's revenue. Windows sales fell short of forecasts last quarter and the company cut growth projections for the year, citing the lower revenue it gets from netbooks. When makers of the computers do use Windows, they typically opt for older and cheaper versions of the software. Equipping Linux on a computer costs about $5, compared with $40 to $50 for XP and about $100 for Vista, according to estimates by Jenny Lai, a Taipei-based analyst at CLSA Ltd.' This is why MS declared war on the segment last year and palm top computers in previous years. While they may have successfully tamed the Asus EEE PC, they can't hold back everyone who wants to make a buck on cheap hardware and free software. Analysts have predicted the fall of MS's business model when computers break below $250/unit retail. We are there now, and it has shown in the bottom line."

Comments

You should not.

[twitter]

You can't blame the recession when M$ underperforms the economy in general and other companies do better.

Over the year, PC shipments were up by 12% but M$'s software profits were only up 2%. Those profits were actually down over the preceding quarter. Then again, it's not like you can trust M$ numbers because they have been caught cooking the books before. Vista is a failure, so I'm not sure how they managed to do keep themselves from sinking, other than squeezing their existing customers harder than ever. That's bad for good will, you know.

Red Hat, IBM, Google and other companies are doing just fine and are growing.

So, the simple answer is best. M$ is having a hard time competing with free software, just like everyone knew they would.

Re:You should not.

[jcr]

Your simple answer ignores the fact that microsoft is underperforming the rest of its industry. Occam's razor doesn't require tossing away facts.

-jcr

Re:You should not.

[David Gerard]

You know, you'd have 100% more credibility if you weren't anon.

Yeah, I'm seeing these everywhere

[93 Escort Wagon]

Oh, wait. No, I'm not.

Re:It's not, it's all just fanboy bullsh*t

[jcr]

their share price is largely a reflection of their shitty dividend policy

I would say that their failure to recognize that their days of being a growth stock is just one of many examples of management incompetence.

-jcr

Re:It's not, it's all just fanboy bullsh*t

[jcr]

Damn it, hit the submit button when I meant to preview.

I would say that their failure to recognize that their days of being a growth stock are over is just one of many examples of management incompetence.

-jcr