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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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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
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".
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
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).
Isn't 2007 the one with the ribbon that no one can use?
That was my idea.
IANAL either, but I don't believe a stockholder can simply sue a company for not being profitable enough. I know you hear all about how a CEO's only responsibility is to make short-term profit for shareholders, but I'm under the impression that it's quite a bit overblown. I believe it's more like, if you can show some kind of unethical behavior where they're purposefully sacrificing profits for personal gain, then you have some kind of case.
The way you hear it around here, you'd think a CEO can be thrown in prison for failing to screw an old lady out of her last dime because he has an enormous legal responsibility to maximize this quarter's profits. I have a hard time believing that.
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
The short answer is no, you can't do that - they aren't losing the profits, they just may be investing them in other projects that have created business lines that aren't so profitable. That isn't illegal, it's a strategy, and it may eventually pay out or it may not.
Now, there are tools like filing proxies, or getting your own board members put in place, that are possible for groups of shareholders working together which can put significant pressure on companies to change their capital structure, dividend policies, share buyback plans and so on. And those have worked to some extent with Microsoft, which was pressured into paying out a huge one-time cash dividend 4 or 5 years ago.
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
Finance income and charges are added/deducted after operating profits. Investors usually want to look at how a company manages it's finances differently to how they want to analyse operations. Wiki has an example income statement.