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Microsoft Should Dump Middlemen, Build Own Phones
suraj.sun writes "Microsoft has a long and illustrious history of operating system sales. The model has served the company well on the PC, but if it wants to make money in the phone market, it needs to start thinking like a consumer electronics company and start making its own phones."
... and failed spectacularly?
And seeing how the "make the OS, leave making the phone (mostly) to others" business model seems to be working rather well for Google, I don't see, why it shouldn't for Microsoft.
RROD on the back and BSOD on the front.
Very stylish!
Just look how well designing the XBox 360 without the requisite expertise worked out for them...
So they'll sink $4-5 billion building hardware, software, branding, and (presumably) a market/network? Yeah, maybe.
Or it could be a Zune phone, replete of velvety brownness and the ability squirt.
Actually, it would be fun to see them flop about in a costly and humiliating manner. Sure the Xbox has turned a profit for some select quarters but I reckon they're still down a few billion overall. Does anyone know how the Zune is fairing?
I, for one, welcome Windows Live 7 Professional Phone Xtreme Crispy Chunky Ranch-Bacon. If it worked for Vista and Hotmail, well, they could work similar magic with a homegrown phone.
(We can still make fun of Vista and Hotmail, right? And what the fuck is with those Hotmail ads? They make less sense than the Seinfeld ones.)
Only losing a couple million dollars is "rather well"? The XBox sells well because it's subsidized by the Office and Windows monopolies, but it's not exactly a profit center.
E pluribus unum
I remember when dumb ideas from unimportant losers was reserved for the comment section.
Do you even lift?
These aren't the 'roids you're looking for.
Hi! I'm Clippy! Microsoft Bob is not available. You could leave him a message if you like. Just hold down the #, *, 7, and 3 keys. It looks like you are trying to make a call. Would you like me to help with that? I see you've dialed a 9. There is an area code "978", can I finish dialing that for you? Oh, I see you've now dialed a "1". You might be trying to make an emergency call. I could... ** REBOOT ** Hi! I'm Clippy! Microsoft Bob is not available right now...
Lots of companies have higher revenue but so what? Have you never heard the following saying?-
Revenue is vanity
Profit is sanity
Cash is king
If Microsoft is getting more profit from it's revenues then that means it has a better business model, and as Microsoft has both higher profits and more cash Apple's increase in revenue, like it's market cap, is largely meaningless. It'll only matter when Apple overtakes Microsoft in profit and equity and assets, until that point Microsoft is still the more solid business.
To illustrate the point, Dell has a revenue of $53bn but a profit of only $1.4bn. By your logic the fact Dell has a revenue around $10bn higher than Apple it's a stronger company, but the profits tell a completely different story. I think you'd be hard pressed to find anyone who believes Dell, despite it's high revenue is a better bet when it has such vastly lower profits and vastly lower assets and equity.
Besides, your assertion that Apple's revenues being about the same as Microsoft isn't even close to true anyway, there's about a $20bn gap with Microsoft at $62bn and Apple at around $42bn and Microsoft's latest results showed them with more revenue than Apple too meaning Microsoft are in fact widening the gap.
Even if Apple do close the revenue gap they still don't have the profits gap closed and still don't have the assets or equity of Microsoft.
So as for where I want to be, well, I'd still rather be where Microsoft is- higher revenue, higher profits, higher equity, greater assets, and not even losing ground in those metrics.
If I were you I'd get a little better understanding of what revenue actually is, what profit is, what equity and assets are and what they mean for a company. Further, you also seem to have a confused view of the importance of quarterly revenue, for example, you suggest that Apple might pass Microsoft in revenue next quarter, which is certainly a possibility, but by how much? maybe in the absolute best case by a couple of $bn but they've got a $20bn gap to close across the year so they'd need to jump at least $5bn ahead every quarter from their current position of being behind, and once they've done that they've got to go from turning $1 in 5 of revenue into profit, down to $1 in 3 into profit which is where Microsoft is, and then building equity and assets takes time. All this for them to even catch up with Microsoft, let alone overtake it.
"And you should get a better understanding of hardware profits vs software profits. Because you don't really seem clued in at all on this."
I'm not sure what you're suggesting I don't understand? That software nets more profit? yes, as I said, I get this, which makes it a better business model for achieving profit. Reality doesn't give a discount to Apple and say "Oh well, okay, so you made less profit, that's okay, we understand the profit you did make was made on hardware so obviously we'll give you an extra star for this". The fact is, Apple makes far less profit.
"And look at the last quarter for MSFT (16.1B) vs AAPL (15.7B) in revenue. That's about the same in my book. And AAPL will be above MSFT next quarter."
So you can see the future can you? No really, you may turn out to be right, you have a good chance, but so what? Read what I said, they need to be $5bn ahead next quarter, and then maintain it for the whole year, and then convert a much larger portion of that from revenue to profit. They aint going to achieve that, no company in history has made such a big leap and Apple despite Steve Jobs' scattering of magic wont be able to achieve it either- it's a long slow process, they may overtake them eventually but it'll be years. You seem to go on about hardware vs. software profits, but again here's the point- Apple can't increase it's revenue to profit conversion when large amounts of it's profit are on hardware so they need a massive boost in software to catch up- that's nowhere in sight, Apple admitted themselves that iTunes and the app store isn't a good money spinner and barely breaks even.
"Also try looking at growth patterns. MSFT flat, AAPL up. Pick any time frame in the last 10 yrs or so."
You're good at making stuff up, I'll give you that. MS are increasing too, certainly not at the rate of Apple, but increasing and most definitely not flat- their last quarter was their record ever profit for example which you know, means an upwards trend.
But here's where you're going wrong, you're assuming Apple can continue increasing at the rate they are indefinitely, that's a hell of an assumption to make. Rapid growth from the underdog is difficult but possible and Apple proved it as did Google, but the saying it's tough on top is very true- as Apple get bigger, they'll start to find things harder and will plateau off themselves.