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Where Microsoft's Profits Come From
derrida writes "Microsoft is the largest, most profitable software company in the world. In case you had any doubts about where Microsoft's profit comes from, there's nothing better than a graph to make all those numbers clear. As you may have guessed, the desktop division is quite profitable, while the online division is a money pit."
What I find most interesting is the way all changes are perfectly synchronized with the exception of entertainment related stuff. This is clear indication of the power of vendor lock-in and tying unrelated products together.
What I would find interesting is to know what events occurred during the valleys and rapid climb moments indicated in the graph. Specifically, what happened in Dec '06 and Sep '09?
We look at the graph: MS is losing like 500Million per year on the Online Division
Then we look at the other graph and sees that Windows and Office has a 2Billion a year profit, EACH
And then we have to read crap like this: "We wonder when Microsoft will finally decide to do what it should have done years ago: Save its money and flush its entire online division down the drain."
No hon, SteveB is stupid, but not as stupid as you. It's called 'strategy', look it up. If it's working or not it's a whole different matter.
how long until
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And Google's cash cow is search advertising and loses money hand over fist on YouTube ($753m last year).
Isn't 2007 the one with the ribbon that no one can use? Doesn't that make it a new product, the fact that no one knows how to use it anymore?
When you're afraid to download music illegally in your own home, then the terrorists have won!
Microsoft is the same company they were 20 years ago. Windows, Office, and Server software are how they make money.
Everything else under Balmer's tenure has been a (financial) failure.
Now, Balmer wants to spend the war chest to win the "search" war. I've just got one question for Steve:
Hey Steve, how much money did you make on the browser war?
This idiot wants to kill Google by spending tons of money on search, yet he has not explained how this will make Microsoft a single dime.
For Microsoft to grow and prosper in other areas, Steve Balmer needs to go.
-ted
After all these years... it's still Windows and Office. After all these years and new products. It's time to fire some executives. Microsoft apparently can't make money at anything new it does. Unlike Apple.
Do not spread "09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0" over the internet, thank you.
IANAL and IANAAC (american citizen), so i'm asking this to whoever is any...
can't shareholder sue microsoft's chief officers/board of directors for lost profits ?
I mean, 2 bil a year is money they could be paying as dividends, right ?
can someone clarify this to me ? thanks;
What ? Me, worry ?
They make their profit on their monopoly products and lose money on almost everything else. That is why the methods they use to maintain these monopolies continue to be the subject of antitrust investigations.
This also demonstrates that they are very good at maintaining their monopoly, but not so good at successful new product development. With a stagnant pipeline, they are especially at risk as FOSS alternatives like Linux, Firefox and OpenOffice become less "alternative" and more "maintstream".
Office and Windows have been their big profit centers for a long time. The big surprise there is that Office looks like it accounts for slightly more of their overall profit. And it was a surprise to see the margin on the server group. Back in the day I worked in a MSFT shop, it seemed like every day we were shelling out money for some license, another CAL or connector because the one we got didn't cover internet connections during a full moon, the support subscriptions that would regularly see large price increases, a piece of support software that was expiring. It was an every day thing that someone would come in and need money for something. Getting on without Windows servers is a blissful breeze in comparison.
You can argue the merits, but I find OpenOffice and GoogleDocs work for me. At home and the office. When we replaced Office with OpenOffice at the shop there weren't any complaints about the change. We did field a lot of calls about how to do stuff (mail merge), but there wasn't anyone crying for Microsoft leeks and onions. Although we didn't have anyone doing a lot of footnotes, either. If memory serves that's one feature of Word that pays for itself in a research setting.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
How am I wasting money by paying for products like Win7 and Office?
I don't know, what can you do with Win7 and Office 2010 that you couldn't do with WinXP and Office 2000? What new improvements in productivity do you gain from them? How did they lower your other costs (e.g. hardware)?
I am TheRaven on Soylent News
Microsoft has about $40 billion in cash. Surely interest income should be there somewhere, probably higher than Entertainment and Devices is on the graph.
Are you kidding? Office 2007 was such a radical change in UI that it took me about 3X longer to put together a simple document over the prior version. And just to keep everyone who's ever used the product on an even level with the intern who's been there 6 months, there's no "classic mode" button!
I understand product managers get tired of just fixing bugs, but there's a reason we don't change keyboards and paper sizes every 20 years. Imagine buying a pen or pencil that now required you to hold it parallel to the paper instead of perpendicular. That's basically what MS did in Office 2007.
"Well, good luck finding a judge that doesn't run a bestiality site."
True. Successful in much the same way Al Capone was. If you can't out compete them legitimately, you do things like "cut off their oxygen supply". Or deliberately alter your OS code so competitor's products won't run on it. These people are unusually successfully in the low-blow business practices that got them to where they are, and now we pay the price (the royal "we") for overpriced, bloated products like MS Office, that effectively have no competition in some markets, and never will. And not because MS is smarter or codes better either. Only because MS and their fellow travellers do not want competition in those markets and get away with it, because they have a monopoly in the OS market. And because these are of course quite profitable (due to absence of competition).
I noticed one difference between Access XP and Access 2003. They apparently added data dictionary triggers, so if you changed a field name or table name in a database, it automatically updated views and forms and reports based on that table. I thought that was pretty cool.
When you sympathize with stupidity, you start thinking like an idiot.
Isn't 2007 the one with the ribbon that no one can use?
That was my idea.
And yet, a decade without innovation seems to have cost Microsoft nothing in terms of their core markets, and their experimental markets seem to be flat. Almost as if they are trying to push the market in a direction the market knows better than to follow.
What a surprise. If you want to sell an Office or Operation System the first thing your customers will ask you, how good does it support Microsoft Office file format or how good will my Windows only applications running.
It's good to have an almost monopoly, you just need to polish your old applications, make the binary formats slightly incompatible, so if some important person buys the new one, everyone else must upgrade, too.
I mean, what choice do customers have? It's either Windows 7 Starter or Windows 7 Home Basic or an Mac in the Apple Store.
Every school in the western world is teaching only Windows and Office. Microsoft is not a company, it's an institution. Every Computer vendor in this world have to support Windows and all the big ones are promoting Windows with everything they have. Just try to get a new Computer, everyone will have a "Xxx recommends Windows 7" and if Microsoft will have a new Windows 8, every big vendor will put a "Xxx recommends Windows 8", regardless of any quality.
For MS and the vendors it's a win/win situation. Microsoft have ads and it sells Windows, as well as other products that are build on top of Windows. The vendors get the Windows copy for free (or almost for free).
Just try and implement and sell a new system or office suite. The entry line to this market is like enter in the tourist space market or to colonize a new planet. But a system or an office suite are very simple applications. You need some know-how, but it's not rocket science.
http://www.mueller-public.de - My site http://www.anr-institute.com/ - Advanced Natural Research Institute
Recently I came across Guy Kawasaki's lectures. In one of them he mentioned, back in the 80s when he was a Mac-Evangelist, Macintosh department employees were given world class treatment like professional massage treatments during working days, First Class air tickets if the flight is 2+ hours etc.
But in reality, Macintosh wasn't earning a dime and continuing the spending spree of all what Apple II department was earning. In return, not a single Apple II employee was permitted to enter the Macintosh building.
I observe some similarity here in Microsoft too (i.e. one department earns, other spends). But seems it is not that bad.
In my humble opinion, I predict the demise of Office and Windows OS in next 10 years (maybe there will be cloud versions). I believe Microsoft will move into more enterprise/back-end technology space rather than remaining in desktop/consumer space (just like IBM). But nothing can be predicted to a higher accuracy, as the internet backbone is yet to achieve higher bandwidths and reliability, which is somewhat mandatory before a full migration in to a cloud based software eco-system.
I don't know, what can you do with Win7 and Office 2010 that you couldn't do with WinXP and Office 2000?
Buy a new PC with it preinstalled.
What new improvements in productivity do you gain from them?
The same productivity that comes from the rest of the new computer with which the Windows operating system is bundled: a faster CPU, more RAM, a larger hard disk, etc.
I don't know, what can you do with Win7 and Office 2010 that you couldn't do with WinXP and Office 2000? What new improvements in productivity do you gain from them? How did they lower your other costs (e.g. hardware)?
Well, new versions of Office simply exist to force you into their new file formats. Office 97, simply put, does everything anyone could want, and does it well. The only real selling point for the latest iteration is the collaboration technology in it, and even then, that's only good for you if you're using it in a business or groups. There's really no practical justification for a home user to upgrade Office.
Windows 7 though, that's a bit different. It appears that MS has really given us a reason to move on from XP, with better graphics support and better security, without the bugs of nags of Vista. Windows 7 is really what Vista should have been. And it would be more compelling if all versions of 7 were 64 bit native, as CPU's have been 64 bit for quite some time now. The 64 bit part would be the real selling point here, as it would allow all versions to move past that 4 GB memory limit, hardware permitting. For a lot of people, the only reason they really had to move to XP from 98SE was the file system limits on FAT32. While 98 was more stable than 95, the reason I upgraded was the 2 GB FAT limit that was smashed with FAT32. Microsoft too often forgets that we need practical reasons to upgrade, not just shiny eye-candy. And real practical reasons, not artificially forced situations like their new Office file formats. The only reason they did that was to force businesses away from 97 and 2K.
Life is hard, and the world is cruel
Can you still get winXP and office 2k? Maybe he had to buy a new computer and didn't want a legacy OS on it. Computers don't last forever you know.
You can still get brand new Windows 95 discs on Ebay. XP and 2K are no problem to acquire. And I'm of the school that says unless there's a real reason why you should upgrade, you shouldn't be forced to. Lots of people use older operating systems because it suits their needs. I'd say for 90 percent of businesses, Windows 2000 would quite ably suit their needs. The only reason many businesses upgrade is because "Microsoft tells us it's time to upgrade".
Life is hard, and the world is cruel
Sounds more like a tautology to me. In markets where they have competed so successfully that there is no surviving competition, they are successful. In markets where they have not and there is still lots of competition, they are not. Or, in the even shorter form: Microsoft is only successful in markets where Microsoft is successful. What a strange coincidence!
I am TheRaven on Soylent News
Office 97, simply put, does everything anyone could want, and does it well
That's just not true. Try publishing a book with Office 97. Suppose you want to change the style of your section headings. LaTeX can do it with a simple change in your header. Just edit a couple of lines and you're done. Or, suppose you want to change the style of references in your bibliography. Again, just a few quick edits in LaTeX. I have no idea how you'd do that in Office 97.
While I can't say that Office 2010 offers anything over Office 97(due to lack of experience), it is definitely not the case that Office 97 does everything one could want. I have heard that the equation editor in 2010 is much better, FWIW.
Give me Classic Slashdot or give me death!
the first thing your customers will ask you, how good does it support Microsoft Office file format or how good will my Windows only applications running
"How good?" Where the heck are your customers, in West Virginia?
I've had two books published that I typeset with LaTeX, so I'm biased to agree with you, but what you say is nonsense. Even MS Word For Windows 2.0 could properly support styles. I could - and did - write documents and then change the heading styles later. Unlike LaTeX, it provided inheritance between styles too, so you could define a heading style, then a heading1, heading2, and so on style for the different heading depths, and update all of the subheading types just by changing the heading style that they inherited from.
I am TheRaven on Soylent News
I can do a lot of things with Office 2010 than I couldn't do with Office 2000. Search folders, RSS, Galleries, better task management, better calendar sharing, better utilization of 64-bit machines....
Windows 7 has some nice advantages as well - it's faster, has better 64-bit support, some nice improvements to the UI (such as pinning items to the taskbar), is more secure...
Are either of them "must upgrades for everybody"? No. Some people will do just fine staying on Windows XP and Office 2000. But a lot of people, especially folks who are power users, will find a lot to like in the new versions.
-B-
"Microsoft tells us it's time to upgrade".
That might be true except for the giant period you ignored where almost everyone didn't upgrade to VIsta, funny XP gets all this praise after years of being torn apart as the most insecure OS during the Vista release and even after the excuse that Vista was bloat which Win7 came along to fix people still complain.
Win7 replaced an old copy of WinXP on an old Dell 1150 laptop and it actually runs better even though I only invested $30 for 2GB of ram at FRY's, even though I had to do a quick google search for video drivers everything else(wifi,burner,etc) worked perfectly fine.
MS used to always be great at the compatibility part and terrible at security/stability, but they have really fixed those two other voids with Vista/Win7 and the ball is in their court. Linux missed the biggest opportunity to capatilize on MS's blunder with Vista and there might never be a chance again for 15+ years considering how stable Win7 is.